Stocks in the U.S. are on pace for their third straight week of gains, undeterred by fiscal stimulus uncertainty in the near term. Fed Chair Jerome Powell again warned Congress last week of the long-term consequences a lack of further stimulus would have on the economy and urged passage of another major stimulus package. Third-quarter earnings season in the U.S. kicked off this week, with a mixed-bag of results from the financial sector. For the quarter, lower than expected loan loss provisions and strong trading revenue helped offset lower net interest margins for some the world’s largest banks. In Europe, rising infections and political uncertainty surrounding the U.K. continued to weigh on international developed markets. On the contrary, perceived strength in China’s economic recovery prospects propelled stocks higher, with the MSCI Emerging Markets Index tacking on more than 1% mid-week. On the data front, headline consumer price index (CPI/inflation) came in at 1.4% year-over-year, which was in line with expectations. Investors will be focusing on earnings and key economic data going forward, with retail sales and consumer sentiment due later this week. Interest rates trended lower this week, with the yield on the 2-year and 10-year Treasury notes trading around 0.14% and 0.72% respectively mid-week.
Source: Morningstar, JPM, Bloomberg, GSAM