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Markets look past unemployment and uptick in coronavirus cases.

Markets look past unemployment and uptick in coronavirus cases.

| June 19, 2020
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Happy Friday, and we wish you a joyous Juneteenth—a chance to celebrate the emancipation of the country’s last slaves in Texas and a day to reflect on our country’s continuing journey towards justice and equality for all. 

We have lots of updated economic numbers for you today, and a wish for a happy and healthy Fathers’ Day weekend! 

Good News 

  • Dozens of vaccine trials are going on around the world, mostly in the early pre-clinical stages, with a few that have progressed to the clinical evaluation phase (red in the chart below.  (Source: Wall Street Journal The Daily Shot, June 2020.)

  • A public-private consortium to fight coronavirus, led by IBM, helped bring together an unprecedented council to fight the coronavirus with technology. Their supercomputers can help scientists better understand the threat we’re facing, running calculations in hours or days that would have previously taken months.
  • Business Outlook survey showed improved outlook, the first positive reading for the Philly Fed Business Outlook Survey since February.

Economic & Market News 

Markets continue to look past the recent uptick in coronavirus cases. Stocks rose this week due to renewed expectations that China will step up efforts to buy more American farm products, but there is caution because President Trump renewed his threat to cut ties with China.   

The stock market is all about technology this year, both in the U.S. and (not shown here) international equities as well. Three sectors with positive returns year to date are Information Technology, Consumer Discretionary, and Communication Services. All other sectors remain negative year to date, with generally upward recent trends. Sector performance since January 1,from Fidelity’s Sectors & Industries Overview: 

  • Mortgage rates have fallen below 3%. Mortgage rates have fallen to a new all-time low for the fourth time this year. Americans who have not yet refinanced may not want to wait much longer before locking in rates.
  • Applications to purchase a home are pushing the highest level in 11 years. Lending standards, however, are much tougher. First-time buyers and borrowers who want jumbo mortgages are the most frequently rebuffed, because that market has been abandoned by major U.S. banks. (from Mortgage Bankers Association) 
  • Restaurant bookings are a sensitive measure of the public’s willingness to go out, so it’s telling that bookings have seen a dip recently. 
  • Unemployment slowly declining: Since March, 45.7 million workers in the United States have now filed for unemployment benefits. Yesterday’s tally of 1.5 million jobless claims was a mere 58,000 lower than the prior week—not much of an improvement. The fact that we’re still seeing more than a million new claims per week, three months into the crisis, signals more permanent damage to the labor market than was previously hoped. Here’s what the trend looks like: 

With thanks to Axios, the Sevens Report, Fidelity, WSJ, and the other sources we used to compile this week’s update. 

 

 

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