Debates all around
Weekly Bond Commentary
In a relatively light week for economic data, markets ground a little higher.
Coronavirus, stimulus talks, political debates all competed for coverage. Virus case counts continued to edge higher, alarming as the weather cools, people head back indoors and flu season nears.
Stimulus talks yo-yoed back and forth, from a Democrat-passed bill in the House to hard-nosed declaration by the President, back to some negotiation—all against the backdrop of continued high weekly jobless claims. This process shows how the sausage of democracy is being made.
The vice presidential debate showed the sharp divisions between the parties. It focused on the key issues facing the country, which continue to be the impact of the virus and the level of economic stimulus needed.
The Federal Reserve released minutes from its last meeting. They showed policymakers had their own debate, an active discussion about how to communicate its intentions. As reported after that meeting, the Fed sees less downside risk than before and was less pessimistic in its baseline forecast. That said, officials were clear that, in their assessment, fiscal support has played a large role in the recovery to date and additional measures are needed, without which the pace of economic recovery likely will slow. This is an unusually strong call by the Fed for further congressional action.