17 Aug August 14, 2020
Week in Review
Employment
Initial unemployment claims fell to 963,000, the first weekly print under one million in 20 weeks.
Our Take: The drop in claims is encouraging as more people are likely returning to work as the economy continues to reopen. However, it is best not to lose sight of the fact that new weekly unemployment claims averaged just 212,000 in 2020 prior to COVID-19 shutdowns. In addition, unemployment remains extraordinarily high. It appears the jobs market is on the road to recovery, but the road may be a long one.
Retail Sales
Retail sales rose 1.2% in July.
Our Take: Retail sales continue to recover, albeit at a slower pace than in May and June, as the economy continues to recover.
Inflation
Both producer and consumer prices rose 0.6% in July. Both increases were double expectations.
Our Take: While the inflation numbers surprised on the upside in July, year-over-year numbers paint a considerably different picture. Consumer prices have risen just 1.0%, while producer prices are actually down 0.4%. Inflation will only become a problem if economic activity increases dramatically or the government prints money to pay its debts. Neither scenario is likely in the near term.
Municipals
Municipalities continue to take advantage of low interest rates and refinance existing municipal bond debt. Since June, state and local governments have sold $41 billion of debt for refinancing according to Bloomberg.
Our Take: Many municipalities are faced with budget gaps due to the pandemic. Strong demand and low rates have allowed state and local governments to save on borrowing costs by refinancing existing debt.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.