Overview: Global stocks were mixed last week as investors weighed weak economic numbers while remaining optimistic that more economies would begin to reopen soon. The S&P 500 finished up 3.5%, international developed stocks were up 0.9%, and emerging market stocks finished the week down -0.5%. In bonds, the Treasury Department announced an increased auction size of $96 billion notes and bonds to be issued this week, and also added a $20 billion 20-year Treasury bond that will hit the markets next Wednesday. Longer-maturity bond yields were higher on the news. The 30-year Treasury yield closed the week at 1.40%, up from the lows of 1.02% reached on March 9. 10-year Treasury yields have not reacted as much to the announcement of increased supply, finishing the week at 0.68%. Oil prices were up sharply last week as global demand outlook improved. Last week West Texas Intermediate (WTI) crude oil prices jumped 25% to $24.74 per barrel. Brent crude oil rose to about $31 per barrel as production cuts led by the OPEC nations have averaged more than 10 million barrels per day since the beginning of May.
Economic update: The impact of economic shutdowns was realized in the April labor market data. Workers filed another 3.2 million jobless claims in the week, with more than 33 million people out of work since mid-March. In April alone, nonfarm payrolls fell by 20.5 million. The headline unemployment rate (U3) surged to 14.7%, though faring better than the consensus of 16.4%. The leisure and hospitality segments had the sharpest decline of 47%, or 7.7 million jobs. Another metric economists track is the underemployment rate (U6). This measure includes discouraged and part-time workers, and hit an all-time high of 22.8% in the report. It may be some time before the unemployment rate falls to the historic low it set just a few months ago. However, we expect the vast majority of the jobs lost in April should be regained within two years once we have an economic reacceleration.
Sources: Goldman Sachs Asset Management, JP Morgan Asset Management, Econoday
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