Overview: U.S. stocks were marginally lower last week, while foreign stocks moved higher. The S&P 500 index was down about – 0.3% for the week, with international developed stocks and emerging markets up 0.4% and 0.6% respectively. The flight to safe-haven assets continued, following heightened U.S.-China geopolitical tensions coupled with concerns surrounding delayed state re-openings amid an increase in COVID-19 cases. In bonds, the 10-year Treasury finished the week at a yield of 0.59%, a 3-month low. Investors digested some disappointing earnings (notably in technology companies), and the first weekly increase in jobless claims since March. Market participants anticipate another round of fiscal stimulus in the U.S. this week, as Congress debates the details of unemployment benefits and potential payroll tax cuts.
A note from JP Morgan – Fiscal Stimulus? By the end of this month, the weekly $600 extra unemployment payment under the CARES Act is set to expire while Congress and the Administration negotiate some form of extension for the program. As we entered the deepest recession since the Great Depression and reached a record high unemployment rate of 14.7%, the CARES Act provided generous benefits to cushion the blow. While this stimulus has kept consumer spending afloat, it has discouraged some from returning to their jobs, thus adding to the challenges facing employers. With COVID-19 cases continuing to grow and joblessness still very high, there is heavy pressure on Congress to extend enhanced unemployment benefits in order to avoid widespread poverty. However, any new program will need to strike a delicate balance between providing enough support for households to pay their bills while still leaving an incentive for people to work rather than remain unemployed.
Weekly Returns and Data
Sources: Goldman Sachs Asset Management, JP Morgan Asset Management, Bloomberg
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