As corporate earnings continue to be reported and, for the most part, exceed expectations, the market’s attention will shift to the status of the jobs market and the stalled stimulus discussion in Congress. Last week saw U.S. gross domestic product fall by the largest amount on record, an annualized 32.9%, as a result of the coronavirus-related shutdowns. This drop was not unexpected, but it does reinforce the need for fiscal stimulus to help bridge the gap until the virus is under control.
The upcoming July employment report is growing in importance as an agreement on the continuation of enhanced unemployment benefits remains elusive. The expectation is for an addition of 1.6 million jobs as the economy recovers from the previous sharp spike lower in employment. Even with this potential increase in new jobs, the unemployment rate is expected to remain above 10%.
In addition to economic data, I will be closely following the fixed income and commodities markets as precious metals are making highs, while yields on Treasuries are seeing new lows.
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