What Happened Last Week:
A week after losing approximately 6%, stocks regained all the ground they lost (plus a little more) climbing between 7% and 9% for the week. Corporate and municipal bonds rose as well. US Treasury bonds were little changed on the week, although that masked a very large drop in
yields Monday through Wednesday followed by a rise in yields Thursday and Friday. Risk markets seemed to take comfort in the idea of Democratic control of the Presidency and House and Republican control of the Senate. This split government means fewer big changes (such as higher taxes or more industry regulation) are likely in the near term.
The Federal Reserve met and kept interest rates unchanged. Fed Chairman Powell urged lawmakers to provide fiscal support to the economy but also indicated willingness to provide monetary support as needed. Unemployment, while remaining stubbornly high, showed some
improvement over the previous month.
What To Look For This Week:
The pace of economic releases slows, with just a few data points on inflation and consumer sentiment being released but not much else of import. Corporate earnings releases slow as well with only 15 companies from the S&P 500 reporting next week.
Markets will continue to focus on trends in coronavirus cases and the likelihood of fiscal stimulus to boost the economy. They will also continue to digest the impact of the elections. These two factors will likely be the primary catalysts for any changes in asset prices during the
Jim, Mark, and Dave
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