Equities sold off on heightened tensions between US and China and concerns of a stalled US economic recovery as virus cases surge in parts of the country. The slow pace of the recovery was underscored by initial jobless claims being both higher than expected at 1.41 mil. and also rising for the first time since March. US-China relations came under acute stress after the US State Dept forced China to shut its Houston consulate based on spying charges, and China responded with a shutdown of the US consulate in Chengdu. The US also banned 11 Chinese companies from US trade and backed out of an extradition treaty with Hong Kong.
Recap: Tax-exempts rallied in sympathy with Treasuries but largely underperformed as the supply-demand imbalance and torrid pace of fund inflows on safe haven status continues to support prices. Investors are clearly enamored with Munis as an alternative safe haven to Treasuries and gold, banking on increased aid to state and local governments in the 5th round of Federal stimulus. Muni funds collected +$2.1 bil. on the week, the 11th consecutive week of fund inflows totaling over +$15.7 bil. since the second week of May; last week’s inflow also pushed the YTD total to positive territory at +$840 mil.Full Weekly Report
Please find attached Ramirez & Co.’s Quarterly Macroeconomic Outlook. In our report, we continue to monitor the US economy, global events and the Fed’s outlook on the economy and rates:
Members of our Financial Strategies Group, Niso Abuaf, Konstantin Semyonov and Duncan Sinclair, would be happy to discuss further any of the material with you.Full Quarterly Report