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Third Wave of Pandemic Takes Toll on Economic Data

There was a significant downturn in case growth late last month. Since then, however, we’ve seen an expected surge as reporting caught up after the Thanksgiving holiday. Clearly, the third wave of the pandemic hasn’t peaked.

Is the Economic Recovery Picking Up?

In the past week, there was a significant downturn in case growth. But this drop may have been due to the Thanksgiving holiday, where cases reported dropped off, rather than to an actual decline in cases. Cases are now surging again, as case reporting of earlier cases is catching up. Again, this is likely due to the holiday rather than to an actual surge. There does seem to be continued improvement overall, but we won’t know for a couple of weeks, when the data normalizes. We still do not know whether the third wave of the pandemic has peaked.

 

Market Update for the Month Ending November 30, 2020

Vaccine news boosts markets in November

November was a strong month for markets, as news about developmental vaccines for the coronavirus caused markets to surge. The S&P 500 gained 10.95 percent in November, and the Nasdaq Composite rose by 11.91 percent. The Dow Jones Industrial Average led the way with a 12.14 percent gain. These strong results brought the three indices to all-time highs.

Medical News Improves, Economic Data Softens

Over the past several days, new infections look to have decreased, and the rate of increase has slowed substantially. With many states implementing anti-COVID measures (e.g., mask mandates and partial lockdowns), infection growth looks to be slowing. It’s too soon to be certain, but we may be approaching the peak of the third wave. Case growth in many states remains at levels that threaten health care systems, but peak case growth should reduce that pressure over time.

Markets Cheer Vaccine News

With new infections hitting all-time highs last week, the medical news continues to get worse. Indeed, the third wave of the pandemic has accelerated around the country, with case growth in many states at levels that threaten health care systems.

 

Weekly Market Update, September 14, 2020

General Market News            

  • The 10-year Treasury yield opened Monday at 0.66 percent, where it closed last week. This rate also happens to be the average rate for the 10-year yield since early April, when rates first dropped from nearly 2 percent. The 2-year yield opened at 0.13 percent, slightly more than its historical low of 0.10 percent but less than its average since April of 0.17 percent. The 30-year yield opened at 1.41 percent, much more than its historic low of 0.99 percent in March and more than its average since that time of 1.36 percent. The Federal Reserve (Fed) meets this week to discuss policy. Fed futures now point to no rate hikes until sometime in 2024.

Economic Recovery May Be Slowing

Over the past week, the case growth rate has reached new lows, and case growth is now below 30,000 per day for the first time since June 21. The pandemic remains under control, and things continue to improve. The control measures are working.

Weekly Market Update, September 8, 2020

General Market News            

  • There was heightened volatility in the rates market last week—the 10-year Treasury yield swung from 0.75 percent to 0.60 percent and then back to 0.72 percent, opening at 0.68 percent Monday. The steepest part of the curve is currently the 10- to 20-year yield, where rates jumped from 0.68 percent to 1.20 percent. The 30-year yield opened at 1.41 percent, and the 2-year yield opened at 0.13 percent. The Federal Reserve (Fed) has made it clear it is willing to provide support with as much liquidity as needed. It meets again next week to discuss policy, which will be the second-to-last scheduled meeting of the year.

Medical and Economic News Continues to Improve

This week, we had more good news on the medical front. The pandemic remains under control and is showing continued improvement. Case growth has declined over the past two weeks, and the case growth rate remains below the lows seen in mid-June. Overall, the control measures are working.

Market Update for the Month Ending August 31, 2020

A positive month for markets

August was another strong month for financial markets. The S&P 500 and Nasdaq Composite both set all-time highs, gaining 7.19 percent and 9.70 percent, respectively. The Dow Jones Industrial Average (DJIA), which has been slower to recover from pandemic-induced volatility earlier in the year, gained a strong 7.92 percent. This brought the index into positive territory year-to-date.