Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of June 13–19, 2020.

The week that was

  • A recent increase in new cases of coronavirus has led investors to worry about whether a second wave is coming.
    • Beijing began implementing shutdowns to snuff out the spread, including shutting down schools.
    • Texas reported a more than 8% increase in hospitalizations.
    • However, there are also reports of a widely available and inexpensive steroid treatment that can help treat COVID-19. So, the race between a second wave and an effective treatment/vaccine continues.
    • To the extent investors are concerned that a second wave of cases will lead to a second wave of economic shutdowns, those worries may be overdone because policymakers can take a more targeted approach to shutdowns than they did the first time. This isn’t to say there won’t be a second wave of coronavirus cases. It’s to say that the economic and market effects of a second wave could be quite different from what happened during the first wave. The amplitude and wavelength could also be quite different.
  • Early signs indicate that China’s recovery is being led by businesses while the U.S.’s is being led by consumers.
    • China’s industrial production and retail sales continued to increase in May. Industrial production rose 4.4% year over year, which was a little slower than the consensus call for a 4.9% rise. However, it’s better than April’s 3.9% year-over-year increase. Retail sales fell 2.8% year over year—better than April’s 7.5% drop, but it missed expectations. China’s consumers seem to need a little more confidence.
    • In the U.S., retail sales surged the most on record in May (up 17.7% month over month) after falling the most on record in April. Industrial production in May increased 1.4% month over month.


  • The Federal Reserve (Fed) announced it would start buying individual corporate bonds as part of its Secondary Market Corporate Credit Facility. Up to this point, the Fed had been purchasing exchange-traded funds.
  • Bank of Japan Governor Haruhiko Kuroda said interest rates would likely remain low into 2023. At its policy meeting, the Bank of Japan expanded its lending program to businesses to 110 trillion yen.
  • Fed Chair Powell testified before Congress. His message—unchanged from last week’s press conference—was a message of uncertainty about the path of the recovery and the Fed’s commitment to try to stay supportive until there’s clear evidence the economy is back on track.
  • The Bank of England announced it will increase the size of its asset purchase program by 100 billion pounds, to an overall total of 745 billion pounds. The policy announcement said asset purchases should be completed by the turn of the year.
  • There were reports that China is going to accelerate its purchases of U.S. agricultural products to better comply with the “phase one” trade deal.


  • North Korea appears to be burning its bridges, quite figuratively. It blew up its liaison office in Kaesong, North Korea. The office was used to hold meetings with South Korea, but apparently North Korea sees no use for the office as the denuclearization talks haven’t gone anywhere in a while.
  • A border dispute along the Himalayan border between India and China turned deadly. Twenty Indian soldiers were killed, according to the Indian government. China hasn’t commented on casualties.
  • The U.S. withdrew from international talks about digital taxes.
  • President Trump signed a bill that imposes sanctions on those in China responsible for running forced labor camps. Uighur Muslims and other minorities have been herded into these camps.

The week to come

  • Various purchasing manager indices will be released on Tuesday for the month of June. These could provide evidence about the pattern of the global economic recovery.
  • U.S. durable goods orders for May will be released on Thursday. The capital goods orders component is often a decent indicator of the appetite of businesses to ramp up production. On Friday, personal income and personal consumption expenditure data for May are scheduled to be released.

Thanks for reading, stay informed!

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