Surveys show confidence despite virus' surge
Weekly Bond Commentary
The holiday-shortened week was long enough to allow equity markets to hit new highs and give investors a boost as they settled into pandemic-restricted Thanksgiving celebrations.
Despite the disruption caused by the rapidly spreading virus, economic data showed an economy still recovering, though in fits and starts. The Markit national manufacturing survey hit its highest level in six years, driven by a striking rise in new orders and hiring. Higher demand led to higher selling prices and higher inflation. Survey respondents indicated hopes of a virus vaccine and an end to election uncertainty made them more optimistic than at any point since May 2014.
Consumers remain confident, though the two major surveys showed a slight decrease. The Conference Board survey respondents saw inflation and income expectations ticking slightly higher, giving them higher confidence to buy homes. Respondents to the University of Michigan sentiment survey were slightly more positive on current conditions, but less so about the future. They, too, saw higher inflation from the low levels observed over the last few months.
While weekly jobless claims again edged higher, to 778,000, the level of continuing unemployment claims fell nearly 5%, to 6.07 million. But these figures remain far higher than pre-pandemic levels, creating real-time worry about holiday consumer spending and good cheer. Markets look to the potential of additional fiscal stimulus once lawmakers return from vacation.