The equity market recovery underway since the end of March plows ahead, despite a backdrop of virus related economic uncertainty. Overseas markets remain below pre-COVID levels, but US stocks, heavy in a small number of large technology firms, have now surpassed their previous highs.
Equity markets posted strong returns for the month of July, continuing their recovery despite troubles with reopening and increases in virus cases in parts of the US. For some equity markets, they ended July where they began 2020.
Markets have largely shrugged off news of renewed virus outbreaks in much of the US and the continuation of large, seemingly uncontrolled outbreaks in many significant emerging market countries such as Brazil, India and Mexico. In the US, markets seem to be in a “heads I win, tails you lose” frame of mind with respect to renewed outbreaks…
Long-term corporate bond yields continued their downward trend in June and are now down approximately 0.50% in 2020. Growing optimism over easing lockdown restrictions and early economic recovery signs pushed both U.S. and international stock prices higher, with emerging markets performing especially well.
The ongoing pandemic and associated economic crisis continued into May, with many of the trends we saw in April continuing for a second month. Those trends include a volatile, although rebounding, equity market and pension discount rates that ended the month where they began.
Total pension buyout sales totaled $4.5 billion in the first quarter of 2020, a decrease of 6% compared to the first quarter of last year but still only the second time first quarter sales in a given year have eclipsed $4 billion.
On Friday, May 15th the U.S. House of Representatives passed the “Health and Economic Recovery Omnibus Emergency Solutions Act” or the “HEROES Act” to provide a fourth round of economic relief in response to the coronavirus pandemic. The legislation covers a wide range of issues including significant contribution relief for single employer pension plans.
April was an excellent month for stocks as investors cheered all of the support that central banks and governments are providing. The total value of the support, both fiscal and monetary, is close to the total amount of income that is expected to be lost…
The novel coronavirus, government and central bank stimulus and a start to reopening economies in some areas drove the markets in April. Additionally, oil markets collapsed as an oversupply caused the price of oil futures to fall into negative territory for the first time in history. Equities looked past the oil market flare up and delivered strong positive returns, with US markets up 13%, recovering close to 60% of the decline.
The US Federal Reserve unveiled extensive new programs to reduce the potential for major companies to declare bankruptcy, including essentially lending directly to companies that were rated investment grade as of March 22. The extent of support provided by the Fed and Congress now reaches almost 20% of US GDP.