Weekly Bond Commentary
Another week of mixed economic data was overshadowed by the weight of increasing coronavirus cases.
Reflecting optimism and strength, the S&P 500 hit an all-time high, and 10-year Treasury yields hit their highest level since March before falling slightly. Manufacturing was slightly lower in November following a stronger October, while the consumer seemed to hold up well. Weekly jobless claims ticked higher, but housing measures showed continued strength, from housing starts to existing home sales. Reported October retail sales were lower, but prior months were revised higher, indicating that the consumer continues to spend.
The longer the virus continues without being addressed by vaccines raises the prospect of weakening GDP. The ongoing failure in Washington to agree to a stimulus plan that would provide support to state and local governments and small businesses raises uncertainty at a particularly unfortunate time of the year. Unemployment at 6.9% indicates that many are still struggling and will likely be unable to enjoy the holidays as in years past, and with virus cases hitting new highs, many will be afraid to gather with family and friends.