Rally In Risk Assets Ex-US: US stocks and bonds took a back seat to offshore rallies this week, providing some much-needed lift to the idea that holding a globally diversified portfolio is more than an outdated academic concept. But let’s not get ahead of ourselves. It’s too soon to declare the end has arrived for the long running dominance of American risk assets on the global stage, but suddenly it’s easier to wonder if this week’s results are a preview of things to come.
Will The US Avoid Eurozone’s Rising Double-Dip Recession Risk?
PMI survey data for October indicate that the Eurozone economy’s recovery is slipping into a new phase of contraction, due to a rebound in coronavirus infections and related blowback on business and consumer activity. The US economy appears more durable so far, although America is reporting a new rise in Covid-19 infections, which suggests that economic headwinds may rise in the third quarter. (Please see the update at the end of this post with encouraging data for October that was published after this article was written.)
Macro Briefing: 23 October 2020
Trump and Biden clash at kinder, gentler presidential debate: WSJ
Biden calls for economic ‘transition’ from oil to renewable energy: AP
Coronavirus forcing a sweeping changes for US workforce: Politico
US approves antiviral drug remdesivir to treat Covid-19 patients: BBC
US 10-year Treasury yield rises to 4-month high: CNBC
Eurozone Composite PMI in Oct shows rising double-dip recession risk: IHSM
UK economic growth ‘slowed considerably’ in Oct via PMI survey data: IHSM
Japan’s economic downturn persists in Oct, PMI survey data shows: IHSM
Coronavirus, election uncertainty are main influences on firms’ outlook: AF
Avoiding virus lockdown may not be be cure for sidestepping economic pain: NYT
US jobless claims fell to pandemic low of 787,000 last week: CNBC
Bonds Take A Hit As Long Treasury Yields Rise To Four-Month High
Betting against long-term bonds has been a losing strategy for several decades and this form of contrarian pain has been especially deep in the past two years. It’s debatable if it’s different this time, but bond bears have a new reason to hope as rising yields weigh on long Treasury prices, which have fallen below a key technical support level.
Macro Briefing: 22 October 2020
US nat’l security officials: Russia and Iran meddling in US election: CNBC
Supreme Court nomination set to advance as Dems plan to boycott vote: NYT
Trump and Biden to meet in tonight’s final debate: AP
Record investor demand for European Union’s debut of ‘social bonds’: CNBC
German consumer sentiment “is fading noticeably in October”: GfK
OxyContin maker Purdue Pharma to plead guilty to federal charges: CNN
Fed’s Beige Book: US economic activity was generally “slight to modest”: MW
Debt-to-GDP ratios surge across Eurozone countries: BBG
Small Cap Equity Factor Gaining On Large Caps And Growth
Large cap and growth shares have dominated the factor horse race during the US stock market’s rebound from the coronavirus crash in May – a trend that carried over from the pre-pandemic period. But the recent strength in small-cap equities hints at the possibility that a leadership change may be unfolding, based on a set of factor ETFs.
Macro Briefing: 21 October 2020
Senate majority leader throws cold water on stimulus deal: NYT
US Department of Justice files antitrust lawsuit against Google: CNET
Pandemic forging a new reality for globalization: Politico
US health care system faces disruption from pandemic’s after shocks: AXIOS
Will last remaining US-Russia nuclear arms treaty survive? BBC
Cathay Pacific Airway to cut 5900 jobs due to pandemic: Reuters
10yr Treasury yield rises to highest level since June: BBG
Next week’s US Q3 GDP report expected to report record gain: CNBC
US single-family housing starts rose to 13-year high in September: CNBC
Desperately Seeking Yield: 20 October 2020 Edition
More than a year ago I reviewed Mr. Market’s offerings for yield-hungry investors and the results were meager, at least in comparison with historical payouts. How does the search-and-explore exercise compare today? Yields on government bonds have fallen, sharply, and so one would expect that slim pickings have become more so. Actually, the average trailing yield has ticked up for an equal-weighted mix of the major asset classes.
Macro Briefing: 20 October 2020
Stimulus talks reach endgame today: BBG
Supreme Court allows mail-in vote counts after election day in Pennsylvania: CNN
Final presidential debate on Thursday will feature muted mikes: CNBC
TSA screens 1 million air travel passengers–highest since March: NPR
Calif. will review FDA-approved coronavirus vaccines before distributing: AXIOS
Are UK-EU Brexit talks finally at an end? BBC
Oil industry focuses on mergers and acquisitions to survive pandemic: NYT
US homebuilder confidence rises to new record high in October: HM
US Stocks And Bonds Led Global Markets Last Week
Most slices of the major asset classes declined last week but US stocks and bonds managed to post small gains for the trading week through Friday, Oct. 16, based on a set of exchange-traded funds.