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A Bird's Eye View Blog

Fireside Charts: May Employment Gains, Optimistic Equities, and Rising Interest Rates

By:BCM Investment Team | Date:Jun08, 2020 | Category: Equity, Economics, Market Highlights, Fireside Charts

Were you prepared for Friday's shocker of a job's report? It's been a while since we've seen some truly good news on employment, so we won't blame you if you had to reread the headline a few times. Not only was the gap between the forecast and actual payrolls the single largest on record, but it looks as though many who were laid off may return to their positions as (slightly more) normal economic activity resumes. Some doubts remain about the veracity of the numbers however, especially given how Pandemic Unemployment Assistance claims are (or are not) counted, so there's still a ways to go toward recovery. Those doubts weren't enough to prevent stocks from rising on the news though—the Nasdaq hit a record intraday high on Friday and there have been some recent gains in the lagging small and mid-cap markets as well—so we're again wondering if the market is getting ahead of itself. A look back at other bear markets and their recoveries may offer some insight. Meanwhile, housing prices are climbing and rates rose across the curve last week (sorry, pandemic house hunters) as supply dries up and the Fed eases off the QE gas pedal.



1. May's job report was off by a record 10 million...to the positive! Better yet, the majority of the layoffs are categorized as temporary...

may jobs report

Source: WSJ Daily Shot, from 6/8/20



2. To fully capture unemployment claims, the Pandemic Unemployment Assistance claims need to be added in.


u.s. sticky total unemployment claims

Source: WSJ Daily Shot, from 6/5/20



3. With depressed housing inventories (who wants strangers in your house during a pandemic?), housing prices are rising. Similarly, new and used car prices have increased due to Americans buying cars as they seek to avoid public transportation.


housing prices

Source: WSJ Daily Shot, from 6/5/20



4. Only 1 of the S&P 500 stocks is down since the March lows. Lots of price gaps have formed in the stock market recovery. Is the market ahead of itself?


s&p 500 above moving average

Source: The Chart Store, from 6/7/20



5. Small and mid-cap stocks are gaining some ground...


small and mid-cap equity gains

Source: The Chart Store, from 6/7/20



6. This chart compares the two fastest bear markets in history.  The recoveries are quite different...  


bear market comparisons

Source: The Chart Store, from 6/7/20



7. And a deeper look at bear market recoveries:


bear market recoveries

Source: LPL Research & CRFA FactSet, as of 3.23.20



8. Interest rates are rising across the curve...


treasury yield curve

Source: The Chart Store, from 6/7/20



9. Despite rising interest rates in the U.S., the USD has been falling...


u.s. dollar index

Source: The Chart Store, from 6/7/20



10. As the Fed moderates its QE bond buying, the yield curve is quietly steepening...


u.s. government bond curve

Source: WSJ Daily Shot, from 6/5/20



11. Yet the Fed has plenty of "ammo" left...


fed's credit lending facilities

Source: WSJ Daily Shot, from 6/5/20



12. The ECB just boosted their QE bond buying by 1.35 trillion euros.


ECB balance sheet forecast

Source: WSJ Daily Shot, from 6/5/20




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Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.