Weekly Market Commentary November 9th to November 13th 2020
An extremely busy news week brought us more political clarity, promising vaccine data, and a sharp uptick in coronavirus cases. Major media outlets projected Joe Biden as the winner of the presidential election, as crucial states including Pennsylvania and Arizona were decided in his favor. Control of the Senate will be decided by a pair of runoff elections in Georgia just after the new year. Pfizer announced that their coronavirus vaccine was 90% effective in a large trial, which juiced markets. However, hospitalizations due to the virus have hit an all-time high and are increasing rapidly. On Thursday, a record 150,000 new cases of the virus were reported, and the near-term outlook has turned markedly negative.
On the heels of an encouraging jobs report, Weekly Jobless Claims beat estimates by 22,000, coming in at 709,000. They are still quite elevated compared to pre-pandemic numbers in the low-200,000s range. Job openings, as measured by the JOLTS survey, stood at 6.4 million, unchanged from last month, but a respectable number. Small business optimism remains high as the economy re-opens, as the National Federation for Independent Business survey came in at a high 104 reading.
There was also a trove of inflation data released. Core and headline CPI were unchanged from last month, coming in lower than expected, despite inflation fears. The Producer Price Index told a different story, as prices increased 0.3% from last month, above the 0.2% estimate. This perhaps indicates that producers are having trouble passing on higher prices to consumers.
In financial markets, equity markets gained this week, thanks to Pfizer’s announcement. Gains were particularly concentrated in hard-hit industries such as casinos and cruise operators. The S&P 500 finished at 3,585, up a little over 2%. The tech-heavy NASDAQ ended at 11,829, down 0.6% as investors moved out of stay-at-home tech stocks, while the Dow Jones rose 4%. In the bond markets, Treasuries sold off due to higher optimism, causing yields to rise. The 10-year Treasury yield finished north of 0.89%, up over 7 bps for the week. The 2-year yield rose 2 bps to 0.18% and the 30-year was up 5 bps to 1.65%.
Some of next week’s economic releases include Retail Sales, Industrial Production, and a slew of data points on the housing market.