Market Notebook


The bond complex ticked higher while global equities struggled during the last week.

COVID-19 concerns were front and center. Equity markets struggled on a slow drip of negative news. Negative price action appeared to sap positive momentum as market participants grew leery of long positions. The high yield bond complex moved lower even though the Federal Reserve has signaled its support of the high yield, “junk bond” market, which is concerning.

Positive sentiment is waning as the number of COVID-19 infections increase. Check out the two week and monthly change in the chart via the link below. A number of states crossed back above the 1.0 line indicating that exponential growth in cases is once again possible. This is not welcome news. The implication is that the recovery in economic activity will be slower than desired. The changes in people’s behavior due to COVID-19 is likely to be long lasting. This will continue to put negative pressure on affected businesses.

The coming week is a heavy economic data release week. Expect possible sharp moves in prices. The most important release of the week will be the jobs report on Thursday. Review portfolios for excessive risk. If sentiment turns negative and momentum wanes further, sharp pullbacks in equities are possible barring additional action by the government.

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