June 29, 2020

Weekly Market Commentary June 22nd to June 26th 2020

Weekly Jobless Claims were reported at 1.48 million, modestly higher than expected, but still a decline from the prior week. Continuing Claims were 19.5 million, also continuing a declining trend, but still indicating a long way to go for employers to call back laid off workers.

Durable Goods Orders rose 15.8% in May, making up some of the ground lost from the -18.1% decline in April. They still remain sharply lower from the same month one year ago.

Personal Income fell -4.2% in May, a smaller than expected drop. Consumer Spending rose 8.1% in the month, solid, but only a partial offset to the -12.2% drop in April and -6.4% in March. The savings rate in the U.S. pulled back in May, but still stands at an historically high level of 23%.

Existing Home Sales in May fell to an annualized pace of 3.9 million. Not far off the mark of consensus estimates, but still lower by -27% from the same month last year. A decline in mortgage rates and rise in new applications may spark a rebound. New Home Sales, particularly starter homes, rebounded in May approaching pre-pandemic levels, as available inventory continues to tighten.

The yield on the 10-Year U.S. Treasury traded in a range of 0.74% to 0.63%, closing lower by 6 basis points on the week at 0.64%.

The S&P 500 Index pulled back for the week by – 2.9% as concerns of a second wave of virus cases potentially leading to a slowed economic recovery dampened investor optimism. The NASDAQ also declined (-1.9% for the week), but continues to lead other U.S. stock indices on a year-to-date basis, higher by 8.7% with other major averages in the red.

Key economic reports next week include a Non-farm Payrolls and Unemployment report that will be closely watched, Factory Orders, Jobless Claims, manufacturing data and the release of Fed meeting minutes.