Stocks opened higher. Another devastating jobless claims number highlights today’s economic calendar, while markets remain focused on re-opening the economy, as more signs emerge that the COVID-19 curve has flattened. At the same time, new cases and fatalities continue to climb, and concerns about inadequate testing/tracing capacity linger. President Trump will release plans to ease lockdown rules today. Senate Democrats continue stimulus discussions with US Treasury Secretary Steven Mnuchin. The wave of financial company earnings continues today.
Global earnings check-in. Take these estimates with a big grain of salt given the uncertainty around re-openings, but emerging markets earnings estimates are still expected to grow in 2020 (Source: FactSet), compared to double-digit, or near-double-digit, declines for developed international markets and the United States. Uncertainty on re-openings remains extremely high, and very few companies have reported. China’s economy has led the way out of the crisis (first in, first out for the accountants out there) and still supports emerging markets equities allocations in our view.
The future of fixed income. Stock returns are no doubt important, but with yields on high-quality bonds at or near their lowest levels ever, what might future bond returns look like? We explore the relationship between starting yields and future bond returns today on the LPL Research blog.
More job losses. Unemployment claims continue to climb at an unprecedented rate. 5.2 million people filed new claims for unemployment in the week ending April 11, pushing the four week total to 22.1 million, or about equal to all the jobs gained since the end of the Great Recession. We knew that jobs would be particularly at risk in a recession in which businesses were temporarily shuttered as a matter of public health, but we also know most of those jobs are likely to come back when the health crisis ends. While little consolation, new claims have now declined week over week in each of the last two weeks, and last week’s decline is easily the largest on record.
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