Equities were off to the races this morning and are on track to set new records following the conclusion to a tense election week and promising news on a Covid-19 vaccine. The U.S. dollar has experienced significant weakness since March and may remain under pressure from growing risk appetite and the transition to the new administration. Eyes will also be on inflation this week—numbers remain fairly weak but are inching closer to 2%. Could we soon see the Fed’s new policy of average inflation targeting in action? Momentum is slowing on the economic recovery in the U.S. as new daily cases spike to a record of 120,000+/day, so we’re hoping this doesn’t turn into a case of stagflation…

Today’s jobs report showed a promising drop in the unemployment rate to 6.9%—down a full percentage point from September—but initial benefits claims continue to roll in at a rate of over 1 million per week. As additional fiscal stimulus has remained a point of contention in the senate, the mortgage delinquency rate has passed 8% to approach heights last seen during the Great Recession. And while America waits for a verdict on the election, tech stocks and the Nasdaq have gotten a boost from the fading likelihood of a single party congressional majority—could equities at large follow the same pattern?

Like the election, the path forward on additional stimulus funding remains TBD. Though the initial $1,200 direct payment helped many pay off debt and gave a temporary boost to disposable income and savings, the glow is fading. The housing market is also feeling the effects of the pandemic era with surging demand, climbing home prices, and a looming rent crisis that has millions facing eviction. And could signals from the manufacturing sector and a look back at 2016 indicate that higher yields may finally be on the horizon? The FOMC kicked off their first post-election day meeting today, but they’ve already made their stance on rates clear…

U.S. equities appear to be growing nervous ahead of the election—the S&P 500® Index suffered its worst week since March and fell nearly 6% last week—but could the dip leave them with more room to grow? Surprise earnings beats are at historic highs, though they are aren’t being rewarded in the typical fashion—investors seem aware of just how difficult a job analysts were tasked with in 2020’s unprecedented landscape. Over in the bond market, could higher yields finally be on the horizon?

U.S. GDP rose 7.4% in Q3—a record 33.1% annualized rate—but it still has a lot of ground to cover to break even after Q2’s historic 9% drop. That may be difficult as Covid-19 rates set records across the U.S. and nearly 23 million Americans remain dependent on unemployment assistance. Meanwhile, the tech giants reported strong earnings yesterday, but could the sector soon run into some issues reminiscent of the Y2K era? And as equity volatility ticks up, traditional diversifiers are offering less support. Will the trend continue as earnings season rolls on?

Economic activity in the Midwest has taken a hit as Covid-19 spreads across the U.S. at its fastest pace since the onset of the pandemic; the Chicago Fed National Activity Index came in at about a third of the expected result in October. Consumers are continuing to curb spending in response to the pandemic and while that’s likely contributed to the boost in average FICO scores, it also poises significant deflationary risk. Earnings meanwhile have offered some pleasant surprises—S&P 500® Index earnings beats are coming in at a record pace—and this comes among a season where the ratio of guidance coming in above consensus verses below is also at record highs. Does this bode well for Q4, or will performance be undercut by the lingering—and accelerating—threat of Covid-19?

The U.S. saw continued growth in both the manufacturing and services sectors in October according to the preliminary Markit PMI report. The services sector, which has been slower to recover in the wake of the initial Covid shutdowns, exceeded forecasts to come in at 56.0. Despite the strong growth from manufacturing though, the U.S. trade deficit with China has reached an all-time high, as have Chinese exports to the U.S. And in a big week for earnings—about 30% of the S&P 500® Index reports this week—we’re seeing once again how performance can diverge dramatically from earnings. Are we poised to see more of the same this week?

The manufacturing recovery may have slowed in September, but we’re still seeing some good numbers from the Kansas City Fed and other regional indices. Covid-induced changes to the workforce remain a major concern as laborforce outflows, hour reductions, and stimulus uncertainty weigh on consumer confidence, which has ticked down amid an apparent third wave of infection. The markets are also feeling the effect of prolonged stimulus negotiations, as well as growing political uncertainty as the election approaches. How have markets historically reacted during election season?

The battle over stimulus continues in Washington as many Americans grow increasingly reliant on savings and other non-paycheck measures to cover expenses amid the accelerating shift from temporary to permanent layoffs and the expiration of the Paycheck Protection Program. Over in the equities market, new offerings are outnumbering buybacks for the first time in a decade and the U.S. Net Equity Supply is growing—thanks in large part to the recent IPO boom. And though the yield curve is inching toward “normal,” the situation is complicated by uncertainties around stimulus measures and the Fed’s capacity to cope, given that their ownership of the Treasury market is already at record highs.