The U.S. economy has moved sideways for the past six weeks and it appears that improvement in the labor market has begun to stall as initial claims for unemployment benefits increased for the second straight week. First-time jobless claims increased by 1.434 million for the week ending July 25, the Labor Department reported on Thursday, while ... READ MORE >
Assessing the bond market ahead of the coming change to Fed policy
With the economy stalling out over the past six weeks, the U.S. Treasury market appears to have had an appropriate response to the direction of monetary policy, risk and uncertainties regarding fiscal stimulus, and foreign and domestic demand for Treasury bonds. It would appear that investors are preparing for the average inflation targeting regime, a ... READ MORE >
FOMC rate decision: Waiting on September
The U.S. economy has largely moved sideways with a downward tilt over the past month as pent-up demand waned and lower- and middle-income households pulled back on spending in anticipation of a reduced pace of fiscal aid. The Federal Reserve used its policy statement and Chairman Jerome Powell his news conference on Wednesday to underscore its ... READ MORE >
Rational business and investment planning during an irrational pandemic
If there were any remaining doubts that the pandemic was real or that it would suddenly disappear into the warm summer air, the recent headlines should have dispelled them. In fact, 60% of the 4.4 million reported infections have occurred after Memorial Day, while the number of deaths attributed to the novel coronavirus is approaching 150,000. The ... READ MORE >
Managing expectations of dollar strength during and after the pandemic
One of the hallmarks of the pandemic era of global finance has been the relative strength of the U.S. dollar despite the trillions of dollars put forward as fiscal aid to mitigate the economic damage. The greenback has increased 3.89% this year using the Fed’s broad trade-weighted index as our benchmark. Because of growing risks around the domestic ... READ MORE >
FOMC preview: Coming attractions at the Fed
The Federal Reserve's rate decisions on July 29 will likely be remembered not for what is stated inside the policy communique. Rather, it will be long noted for what Fed Chairman Jerome Powell says at his news conference following the publication of the policy statement with respect to coming change in the Fed’s policy regime. In our estimation, both ... READ MORE >
Initial jobless claims, by state: Texas passes 3 million
Texas became the fifth state to have processed 3 million initial filings for unemployment benefits since the outbreak of the novel coronavirus and the shutdown of local economies on March 7. Of the four other states (California, Florida, Georgia and New York), only New York has escaped the latest outbreak of COVID-19 infections that is sweeping ... READ MORE >
Initial jobless claims: Slowing economy pushes claims higher
A series of alternative and near real-time data show that the economy began to slow on or around June 24. First-time jobless claims, which increased by 1.416 million for the week ending July 18, affirm the evolution of that data and point to risks around a slower pace of workers being recalled to their pre-pandemic jobs. Pauses, pullbacks, shutdowns and ... READ MORE >
Policy cliffs approaching as economy slows
While we anticipate that Congress will approve a fifth round of fiscal aid to support the economy as the pandemic intensifies, it is now clear that this aid will not be put in place in time to prevent an “air pocket” in the economy later this summer. The lapse in aid to 20 million Americans that pumped roughly $116 billion into the economy in June ... READ MORE >
No vaccine, no recovery: The long road back
It is becoming quite clear that absent an accessible and widely distributed vaccine, there will be no complete economic recovery. What originally was thought to be a 15 week problem has quickly evolved into something that looks more like a 15-month challenge. The premature reopening of the U.S. economy has resulted in an intensification of the pandemic, ... READ MORE >