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 20–26, 2020.

The week that was

  • The week began with a little confusion when President Trump’s trade advisor, Peter Navarro, was quoted as saying the U.S.-China trade agreement was over. Navarro then said the quote was taken out of context, and President Trump tweeted that the trade deal was “fully intact.” On Friday, China said there are certain “red lines” the U.S. shouldn’t cross if the parties want to keep the trade deal in place. That was a not-so-subtle way of saying the U.S. should keep its opinions about what China views as domestic matters to itself.
  • There’s been a recent increase in coronavirus cases, especially in the Sunbelt. This contrasts with the first wave, which was mainly centered in areas with a high population density where a lot of people rely on public transportation. Houston hospital beds have been full, and the percentage of positive cases has been increasing. Texas rolled back its reopening plans a little by saying bars had to close and by putting restrictions on outdoor gatherings.
  • Investors are watching two major risks: the pattern of the economic recovery from the shutdowns and the state of relations between the two largest economies. There’s always something to worry about. It would actually be worrying if there wasn’t something to worry about.



  • Purchasing manager indices surprised to the upside. France’s manufacturing and service sectors returned to growth while other countries’ indices showed signs that their recessions were getting less bad.
  • The Bank of England (BoE) Governor Andrew Bailey said the BoE might reduce the size of its balance sheet before it starts hiking rates. Up to this point, the consensus was that the BoE would hike rates first. So, this is a subtle way to say that rates might stay lower for longer than originally expected.
  • The International Monetary Fund (IMF) released its updated economic projections. It expects global gross domestic product (GDP) to shrink 4.9% this year. It expects 2021 GDP to grow 5.4%. These numbers are a bit worse than April’s projections. At that time, the IMF figured global GDP could shrink 3% in 2020 and then bounce back 5.8% in 2021. The IMF projects U.S. GDP will contract 8% in 2020 and then advance 4.5% in 2021. It expects the euro area to contract 10.2% in 2020 and then grow 6% in 2021.
  • It looks like the improvement in the U.S. labor market may have slowed. Initial claims for unemployment have fallen, but the rate of change has slowed. For the week of June 6, more than 30 million Americans collected some form of unemployment benefit, whether through traditional state programs or through the Pandemic Unemployment Assistance Program. Some businesses may try to ramp up activity after the Fourth of July holiday. Enhanced benefits of $600 per week are set to expire July 31.
  • The Federal Reserve (Fed) said the biggest banks in the U.S. cannot increase dividends or resume share buybacks through at least the third quarter of this year. The Fed said banks performed well in its annual stress tests. However, the Fed is concerned about the effects of the coronavirus crisis on the economy. Randal Quarles, Fed vice chair for supervision, said this is an effort to force banks to preserve capital in the coming months.



  • Treasury Secretary Mnuchin said the White House could get behind another economic relief package. Negotiators are aiming for something in July, especially since enhanced unemployment benefits expire at the end of July.
  • The U.S. federal government posted a notice that it’s considering $3.1 billion in tariffs against France, Germany, Spain, and the U.K.
  • Partly because the U.S. still prohibits Europeans from entering the U.S., the European Union (EU) says it will prohibit American travelers from entering the EU even though the EU plans on opening its borders to travel on July 1. It’s also likely a partial rebuke of the way the U.S. has been handling the coronavirus outbreak.
  • In response to an increase in coronavirus cases, Texas slightly rolled back its reopening plans by closing bars and putting restrictions on outdoor gatherings.


The week to come

  • It will be a holiday-shortened week. With the Fourth of July falling on a Saturday, exchanges will be closed on Friday.
  • China’s purchasing manager indicators are released Monday evening. In May, China’s manufacturing index was at 50.6, and the consensus is calling for a 50.5 reading for June. Anything above 50 indicates economic expansion. On Wednesday, the U.S. ISM Manufacturing Purchasing Managers Index is released. In May, it was at 43.1, and the consensus seems to be looking for a slight improvement to 47.8. On Wednesday, the Federal Open Market Committee’s minutes from its June meeting are also released.
  • The U.S. employment situation report will be released a day earlier than usual, on Thursday instead of Friday. Nonfarm payrolls expanded 2.5 million in May, and the consensus is calling for a 1.95 million increase for June.

Thanks for reading, stay informed!

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