Insights

Top News:

6/29: Based on contract signings, pending home sales jumped 44.3% in May, reversing two straight months of decline.

 

6/30: While remaining well below pre-pandemic levels, the Conference Board Consumer Confidence Index showed better than expected improvement in June.

 

7/01: Pfizer and BioNTech announced “encouraging” preliminary data on their joint vaccine candidate.  Separately, U.S. manufacturing activity in June expanded for the first time since February.

 

7/02: Reflecting data as of mid-June, the US Labor Department reported a stronger than expected monthly employment situation.  However, excessive optimism was tempered by the latest increase in weekly continuing jobless claims (6/27 report).

 

7/03: Reaching yet another grim milestone, U.S. reported a new all-time high for Covid-19 cases recorded in a single day.

 

Heard on the Street:

“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities… In March, we lowered our policy interest rate to near zero, and we expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals.”

—  Federal Reserve Chairman Jerome Powell in House committee testimony on 6/30/2020

 

“We are in a much better place right now than we were at the end of last quarter. We started the recovery with two strong months here of the recovery in data for May and June. And we also have a lot of policy support on both the monetary and the fiscal side. So the conversations we’ve been having is to start to take a bit more risk in the portfolio, being a bit overweight equities versus bonds, starting to think about cyclical sectors and regions within equities, starting to think more about corporate credit on the bond side. But at the same time we’re also thinking [that] the second half is not going to be easy so we want to avoid the extreme of going to overweight risk.”

— Gabriela Santos, global market strategist at J.P. Morgan Asset Management as quoted by CNBC on 6/30/2020

 

Longer Game:

Public finance observers are beginning to assess the economic impact of Covid-19 on states and local governments. A sobering Cleveland Fed analysis predicts cuts in essential services relied upon by most Americans (here for an abbreviated treatment of study).

 

Bonus:

In an interview with the Journal of American Medical Association, Dr. Anne Schuchat, principal deputy director of the CDC, provided a stark assessment of where the U.S. stands in the current epidemic.  She warns, “We are not even beginning to be over this.”