Overview: In a quiet week for economic data, stock markets climbed last week on hopes of resolution of a stimulus package to aid economic recovery. In the U.S., the S&P 500 Index finished the week up 3.9%. In Europe, stimulus optimism supported equities despite new coronavirus restrictions, as international developed stocks (MSCI EAFE) finished up 3% and emerging markets (MSCI EM) stocks were up 3.8% on the week. Bond prices fell and yields rose in part on anticipation that a $2 trillion stimulus bill would require increased issuance of U.S. government debt. U.S. 2-year and 10-year Treasury yields ended the week at 0.15% and 0.77%, respectively.
Economic Outlook (JP Morgan): The job market continued to show gradual improvement last week. Initial jobless claims increased slightly for the week ending October 3, but were roughly in line with expectations. For the week ending September 26, continuing claims fell more than expected to about 11 million, down from nearly 12 million unemployed the week prior. September purchasing managers (PMI) numbers showed that while the global economy is continuing to recover, economic activity in most countries remains well below pre-COVID-19 levels. The global composite PMI index came in at 52.1 for last month, slightly down from 52.4 in August. While the reports suggests that global economic growth has decelerated, the economy continues to recover from its April bottom. Still, gross domestic product (GDP) levels in major regions such as the U.S. and Europe have likely not achieved a full recovery. Going forward, we expect the rest of the world to grow slowly, as most countries continue to struggle with the virus. In contrast, China should continue a more robust recovery, presenting itself as an attractive opportunity for investors given the less favorable outlook elsewhere.
Weekly Returns and Data
Sources: Goldman Sachs Asset Management, JP Morgan Asset Management
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