Equities ended higher on the week while Treasuries sold off on US presidential election certainty and a promising Covid-19 vaccine — despite skyrocketing Covid-19 cases across the US and Europe and a low probability of fiscal stimulus before Jan. S&P 500 gained +2.16% on the week (+10.97% YTD), the DJIA was up +4.08% (+3.30% YTD), and NASD lost -0.55% (+31.84%). The Treasury index lost -0.30% on the week (+7.80% YTD) with yields higher across the curve, led by the 10yr yield, which rose +7.8 bps on the week to 0.90%. The week began with equities trading sharply higher and the 10yr Treasury yield rising to 0.98% following positive Covid vaccine data from Pfizer and BioNTech (90% efficacy).
Munis outperformed Treasuries across the curve given the rates sell-off discussed above, although posted very small gains on muted primary and secondary market activity following the election week. MMD was bumped only -1 bps in the front and long-end (1-5yrs; 20-30yrs). The S&P Main Muni index gained 0.12% (+3.66% YTD) with outperformance in the Transportation index (0.34% week; 2.75% YTD) on the vaccine news. Fund inflows on the week were +$549 mil. (+$14.2 bil. YTD).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:
• The disruption from COVID-19 is set to cause the steepest fall in global GDP since WWII. The Fed projects -6.5% growth in 2020, followed by 5.0% 3.5% in 2021 and 2022 • The Fed projects an unemployment rate of 9.3% by the end of 2020 vs its December projection of 3.5%, and expects the unemployment rate to decline to 6.5%, 5.5%, and 4.1% respectively in 2021, 2022, and in the longer run
• The Fed funds rate remains unchanged at 0%-0.25%, and will remain there through 2022, according to the median FOMC estimate
• Broad based fiscal stimuli will likely reach 20% of GDP. About half of it will be monetized by the Fed
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