American consumers have returned to the retail space with far greater swiftness than expected—September sales growth came in at more than double the Dow Jones consensus estimates—but they may not necessarily be “buying American.” The U.S. trailing 12-month trade deficit has soared to ~$3.12 trillion, enough to put even 2008 to shame. And though we’ve seen some recent signs of strength from the manufacturing sector, the recovery looks to be plateauing. That’s not the case for negative-yielding debt though, which has returned with a vengeance. Is the fixed income space poised for more struggles?

The Philadelphia Fed manufacturing index surged to 32.3 this month, its highest reading since the onset of the Covid-19 crisis, more than doubling both the expected figure and September’s reading of 15. Manufacturing growth has also continued in the New York region and is projected to surge further globally over the next few months, but the services sector is still facing serious struggles. Public debt has surged to historical highs in 2020 and, though it’s yet to spark significant inflation, its presence is sure to be felt in the bond market. And as second (or even third) waves of infection take hold, are global economies prepared to cope?

U.S. CPI grew 0.2% in September—its slowest pace in four months—to 1.4%, directly in line with expectations but again short of the Fed’s 2% target. Still, it’s a rosier picture here than in Europe, where core inflation looks to be cruising downward toward zero. And we’ll say it again: the bond market is under threat. As corporate debt soars, credit risk is climbing, and net issuance is poised to approach record highs. What’s more, bankruptcy filings don’t typically peak until 5-6 quarters after a recession, so these struggles aren’t likely to disappear as quickly as we might hope. Do you have a plan to meet return goals if yields continue to disappoint?

As we move off the S&P 500® Index’s best week since July, small and mid-caps remain down year-to-date but have gained significant ground in recent weeks. Risk appetite appears to be growing among investors—perhaps unsurprising in a historically low interest rate environment—and we’re noticing a couple of potential trends in yields, but time will tell if they’ll bear out and/or how long they’ll last. Finally, the USD’s recent weakness—it just fell to a 17-month low against the yuan—is giving a boost to commodities. Could it be enough for them to break out from a nearly decade-long downward trendline?

The recovery is rolling on as we enter Q4, but momentum has slowed significantly. Employment in particular looks to be plateauing—another 840,000 Americans applied for first-time unemployment benefits last week. Central banks are struggling to spark inflation, and businesses in need of funding have been issuing a massive wave of new debt. High yield fund flows are elevated, but with corporate bankruptcies brewing and U.S. insolvencies projected to hit 57% in 2021, it could prove a risky prospect.

Global manufacturing growth has staged a massive recovery to hit a ~2-year high, but cost cutting in other nations is causing a headache for the U.S. as the trade deficit surges to $67.1 billion—its highest level in 14 years. As the debate (and messaging) around additional stimulus measures wears on, federal and local government debt has already soared to historic heights and is raising concerns about both inflation and a potential oversupply of muni bonds. Over in Europe, a second wave of infection has taken hold and already dealt a blow to the Eurozone services PMI. Could this further erode the region’s already-shrinking share of global GDP?

Jobs are still coming back, but at a slower pace. Approximately half of the jobs lost since the onset of the pandemic have been recovered, and—while not exactly forming a full V (we see more of a checkmark)—are returning at a significantly faster pace than in past periods of significant losses. State and local governments have seen massive losses to tax revenue in 2020 in a development that could spell trouble for muni-bond investors. And while 10-year UST yields may look strong from a certain angle, the trend likely isn’t sustainable. Do you have an alternative in place?

Personal spending climbed 1.0% in August, though spending on services is still lagging. The trade deficit has widened in 2020, bucking the typical pattern from past recessions as the U.S. suffers a 10.1% decline in real GDP. U.S. equities have outperformed the global market since 2012 with large-caps leading the charge, but fixed income yields are continuing to disappoint. Is it time for corporate DB plans to consider GTAA as an alternative?

Economic reopenings are rolling on—NYC welcomes back indoor dining today—but small businesses are still struggling. 43% of those surveyed reported seeing revenue more than halved since the onset of the pandemic, and it’s being reflected in their employment numbers… which are very reminiscent of 2009. But how does the broader employment recovery stack up against previous recessions? Meanwhile, S&P 500 Index companies look to be feeling optimistic on the earnings front as we close out Q3, and October and November have historically been strong months for the index. With political tensions ratcheting ever-higher ahead of the election, will the trend continue?