What Happened In the Last 16 Days Ended October 9, 2020:
On September 23, the S&P 500 was 3237, off 9.6% from an all-time high of 3581 registered on September 2. In the last 16 days, the S&P 500 rose 7.4% to close at 3477 on Friday. What is remarkable is that the two-week stock market recovery was accompanied with a number of interesting developments. Long-term Treasury bond yields moved up sharply, resulting in a steeper yield curve and a higher neutral rate, reflecting an increase in inflationary expectations plus a reduced allure for the dollar. There is no doubt that the market is encouraged to see how remarkable the economic recovery has been. The Atlanta Fed’s GDPNow model is predicting that real GDP growth in the third quarter will increase at a seasonally adjusted annual rate of 35.2%. Meanwhile, October economic prints produced by the Institute for Supply Management and IHS Markit are still moving in the right direction, suggesting that growth momentum remains intact, albeit at a slower pace.
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By Hubert Marleau
By Hubert Marleau