Weekly Market Recap

Making (less of) a claim

10/08/2020

Week in review

RBA holds rates
China Caixin PMI for manufacturing rises to 52.8
Australia June retail sales increase 2.7% m/m

Week ahead

China CPI inflation
Australia business and consumer confidence
Australia employment report

Thought of the week

The U.S. government is still trying to agree another round of stimulus to support the economy and extend the pandemic induced increase to unemployment benefits which expired at the end of last month. There are many sticking points between the Republicans and Democrats in the negotiations, but a key one is whether the $600 weekly increase is too high and creates disincentives to find work. A deal will eventually be found, between the two parties but it may prove to be a stop gap until the next congress is formed in January. So far it appears that the steady improvement in the labour market has not been impacted too much by this delay. Noting that weekly data can be volatile, the initial jobless claims data released last week has fallen to its lowest level in months. Still the number of filings are massive compared to pre-pandemic levels and illustrates that while things may be better they are still far from good.

Making less of a claim
U.S. weekly initial jobless claims, millions

Source: U.S. Department of Labour, J.P. Morgan Asset Management, all returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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