Hello, I'm Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
Last week U.S. equities finished mostly lower, with the S&P 500 declining less than a percent. The U.S. dollar jumped a couple percentage points, which led to declines in the price of gold and WTI crude. Several factors contributed to the decline in risk assets including mounting doubts about the likelihood of another fiscal stimulus bill before the election. This was chalked up to the politics surrounding the decision by President Trump and Senate Republicans to fill the Supreme Court vacancy left by the passing of Ruth Bader Ginsburg.
Last week also saw a good deal of communication from the Fed, including three days of testimony from Chair Powell. Much of the focus was on the need for additional fiscal policy to support the economy amid a notable deterioration in economic data, especially with regard to small businesses and the likelihood of permanent closings.
Election uncertainty also weighed on markets last week as polls showed a tightening race in some swing-states. There continued to be concerns about delayed results given the expected surge in mail-in ballots, along with the potential for litigation.
Elsewhere in the world, rising coronavirus cases in Europe started to garner more attention. Reports show that the daily count for the main five European countries hit a new record high of over 37,000 late last week, easily exceeding the previous peak level reached back in April.
There were a few notable developments on the vaccine front. Johnson & Johnson announced that its experimental coronavirus vaccine has entered the final stage of testing in the U.S. The vaccine, the fourth to enter late-stage trials in the U.S., is the first that aims to protect people with a single shot. Also last week, Novavax announced it has started a 10,000-person Phase 3 study of its coronavirus vaccine candidate in the U.K. to take advantage of the recent surge in cases there.
The economic calendar is pretty busy this week. We get some important September economic data, including the official China PMIs, the U.S. ISM manufacturing index and the employment report, which will be the last one before the election. We also get the third and final read on second quarter GDP. However, perhaps the most important event will be the first presidential debate between Trump and Biden on Tuesday.
As always we will be watching and reporting back to you next week. Thank you.
