Last week’s employment data surprised to the upside again with a 4.8 million increase in payrolls after last month’s revised-higher 2.7 million. The unemployment rate fell by 2.2% to 11.1%. The improvement in payroll gains continued at a time when the number of initial jobless claims remained elevated at more than 1.4 million for the week, while continuing claims remained above 19 million. The differences in employment statistics underscore the challenge of evaluating the impact on the economy during the pandemic. This difficult environment for interpreting fundamental economic data will likely continue for many months. The data on the virus side is equally challenging to interpret, given the local and regional impacts as the economy navigates the pandemic.
The markets will continue to see higher volatility as traders contend with all of the uncertainty. I expect more stimulus in addition to the extension of the Paycheck Protection Program. The stimulus will continue to add support to the markets and economy and push valuations to higher levels than fundamentals will warrant. In the short to intermediate term, it is difficult to focus on fundamental valuation as the commitment to support the economy and markets remains very high.
This blog post is for informational use only. The views expressed are those of the author(s), 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.