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Weekly Market Snapshot

April 3, 2020

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

Initial claims for unemployment benefits rose to 6.65 million in the week ending March 28, up from 3.31 million in the previous week (the previous record for one week had been 695,000, set in 1982). That’s nearly 10 million in two weeks, more than in the first six months of the 2007-09 recession. It is also more than 6% of the labor force.

Nonfarm payrolls fell by 701,000 in the initial estimate for March. The payroll survey is for the pay period that includes the 12th – so this report missed the sharper weakness in the final two weeks. However, seasonal adjustment amplified the decline in jobs seen in the first half of the month (unadjusted payrolls fell by 251,000). The unemployment rate rose to 4.4% (from a 50-year low of 3.5% in February), but will rise a lot more in the report for April (due May 8).

The ISM surveys for March were not as bad as feared (manufacturing: 49.1, non-manufacturing 52.5), but virus-related delays in deliveries added 3 points to each index. Unit motor vehicle sales fell 32%, to an 11.4 million seasonally adjusted annual rate in March (vs. 16.7 million in February).

Next week, jobless claims will remain the key economic data report to watch, and we can expect another gigantic number (and note that we haven’t seen the wider eligibility from the CARES Act kick in yet). Wednesday’s FOMC minutes from the March 15 policy meeting should give us a picture of what the Fed was worried about at that time (and the Fed’s done a lot since that meeting). The financial markets will be closed for the Good Friday holiday, but the Bureau of Labor Statistics doesn’t have the day off and will issue the March Consumer Price Index (which should reflect a sharp drop in gasoline prices).


Indices

  Last Last Week YTD return %
DJIA 21413.44 22552.17 -24.97%
NASDAQ 7487.31 7797.54 -16.55%
S&P 500 2526.90 2630.07 -21.79%
MSCI EAFE 1506.66 1561.60 -26.03%
Russell 2000 1085.81 1180.32 -34.92%

Consumer Money Rates

  Last 1 year ago
Prime Rate 3.25 5.50
Fed Funds 0.00 2.40
30-year mortgage 3.62 4.30

Currencies

  Last 1 year ago
Dollars per British Pound 1.240 1.316
Dollars per Euro 1.086 1.123
Japanese Yen per Dollar 107.91 111.49
Canadian Dollars per Dollar 1.414 1.335
Mexican Peso per Dollar 24.260 19.220

Commodities

  Last 1 year ago
Crude Oil 25.32 62.46
Gold 1637.70 1295.30

Bond Rates

  Last 1 month ago
2-year treasury 0.23 0.44
10-year treasury 0.59 0.71
10-year municipal (TEY) 2.83 1.51

Treasury Yield Curve – 04/03/2020

Chart

As of close of business 04/02/2020


S&P Sector Performance (YTD) – 04/03/2020


Chart

As of close of business 04/02/2020


Economic Calendar

April 6  —  NCAA Final (in some alternative universe)
April 8  —  FOMC Minutes (March 15)
April 9  —  Jobless Claims (week ending March 4)
 —  Producer Price Report (March)
 —  UM Consumer Sentiment (mid-April)
April 10  —  Good Friday Holiday (markets closed)
 —  Consumer Price Index (March)
April 15  —  Retail Sales (March)
 —  Industrial Production (March)
 —  Fed Beige Book
April 24  —  Durable Goods Orders (March)
April 29  —  Real GDP (1Q20, advance estimate)
 —  FOMC Policy Decision

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

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