Overview: Stocks rallied across the globe last week. In the U.S., the S&P 500 index was up 3.3%, notching a fourth consecutive week of gains. International developed stocks (EAFE) rose 1.7%, and emerging market stocks (EM) were up 2.8%. Domestically, markets were encouraged by the FDA announcement of emergency-use for convalescent plasma in COVID treatment, which coincided with a fall in U.S. coronavirus cases. In addition, investors reacted positively to the Federal Reserve signal of increased flexibility around its inflation target. Under the new approach, the Fed will use a flexible form of average inflation targeting around 2% and will respond only to shortfalls in employment. Longer dated bond yields increased on the news, with the 10-Year yield up 9 basis points (bps) to 0.73%, and the 30-Year yield higher by 17 bps to 1.52%.
Economic news: July marked the first increase in personal income since the stimulus payments in April. U.S. consumer income and spending rose 0.4% and 1.9% respectively from the June numbers. This week will be an important data week, highlighted by initial claims on Thursday (consensus 977,000 new claims) and the employment report on Friday. In that jobs report, the non-farm payrolls consensus increase is 1.4 million, with the unemployment rate expected to drop from 10.2% to 9.9% for the reporting period.
Weekly Returns and Data
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