As equity markets across the globe move higher despite a dramatic rise in coronavirus cases in the U.S., this week’s earnings reports will provide a fresh look at the impact of the pandemic on corporate fundamentals. With many companies eliminating earnings guidance due to uncertainty, the potential exists for large surprises. I’ll be watching the bank earnings closely for more information about the impact on the overall economy.
While stocks move higher, Treasury yields in the U.S. continue to sink lower, with many parts of the yield curve reaching new lows as the expectation for low-for-long rates continues to grow. The divergence between the move in stocks and bonds will ultimately be resolved, but the amount of time for that to occur could be significant.
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