Reopening and a Vaccine

May 18, 2020

Reopening and a Vaccine Photo

The markets struggled last week as the challenges and uncertainties of reopening the global economy stole the headlines. Given the amount of both monetary and fiscal stimulus that has been injected into the economy, markets will likely be very sensitive to news on two topics. The first is how the reopening of the U.S. economy is going, along with any potential setbacks. Consensus opinion seems to forecast a choppy reopening with more normalcy in the fourth quarter. The second topic is progress toward a vaccine or effective treatment for the coronavirus. The latter is essential to seeing a true return to normal behaviors in a shorter time frame. Ultimately, reopening the economy and progress related to a vaccine or treatment are intertwined factors that may lead to big market moves in either direction.

Risk markets have already priced in a significant amount of good news regarding the future path of the economy, but could still post large gains on any positive and sustainable news given the amount of liquidity in the system. The last week has seen oil prices rebound significantly to over $30/barrel as supply cuts have occurred quicker than anticipated. If demand snaps back over the next few months, expect oil prices to continue to rise.

Tags: Coronavirus | Markets | Monetary stimulus | Fiscal stimulus | oil prices

< Go to Monday Morning O'Malley

This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications