Unemployment Hits Pandemic-Era Low, U.S. Index Correlation Near 20-Year Low, and a Bond Market Check In
March 26, 2021 | FIRESIDE CHARTS
Economic recovery continues to gain momentum in the U.S. as new unemployment claims drop to a pandemic low of 684,000. Business activity and manufacturing remain robust and are continuing to grow, despite last month’s polar vortex and durable goods’ first dip in 10 months. The Covid factor though is still reshaping the U.S. economy and may be flying under the CPI radar. And as the major U.S. indices step even further out of sync, share buybacks have accelerated and are once again in record-setting territory. Meanwhile, demand for bonds remains low as investors appear anxious about the massive flood of new issuance and rolling 12-month returns for U.S. high yield have climbed above 20% for only the third time on record. Infection rates have ticked up in Europe as they struggle to contain the new British variant, but the Eurozone economy remains firmly in growth mode and the personal savings rate shows citizens could be well positioned for a post-pandemic hike in spending.
1. Vaccines, stimulus, and American optimism = renewed recovery!
Source: Oxford Economics, from 3/26/21
2. It has been a slog, but new unemployment claims continue to decline after a seven-month plateau:
Source: The Daily Shot, from 3/26/21
3. Despite the deep freeze in the South last month, U.S. manufacturing remains in solid growth mode:
Source: The Daily Shot, from 3/25/21
4. Is the Covid factor also messing up the CPI calculation as Americans adapt to new ways of spending?
Source: The Daily Shot, from 3/25/21
5. We’d be curious to see a similar chart on how and when this will be paid for…
Source: The Daily Shot, from 3/25/21
6. The duration on recently issued mortgage-backed securities will extend significantly as it no longer makes sense for homeowners who locked at the lows to refinance:
Source: The Daily Shot, from 3/26/21
7. The large-cap/small-cap leadership battle has U.S. equity correlation at a 20-year low:
Source: The Daily Shot, from 3/26/21
8. They’re (buy-) ba-ack…
Source: BofA Research, from 3/25/21
9. As the trillions of stimulus is paid for by new bond issuance, the number of buyers has fallen significantly. The FED is the buyer of last resort:
Source: The Daily Shot, from 3/26/21
10. Does this look like an equity chart at first glance? High Yield correlates with equities more than other bonds:
Source: The Daily Shot, from 3/26/21
11. As a whole, Europe’s economy returned to growth mode (>50) last month. Will the new Covid surge and lockdowns reverse this once again?
Source: The Daily Shot, from 3/25/21
12. Europeans, like Americans, have a lot of “excess savings”. Will their pent-up demand unleash a spending spree after the pandemic?
Source: The Daily Shot, from 3/26/21
13. The British variant has exploded in Europe. One study shows this variant being 64% more deadly for older folks. BTW, this variant is also exploding in Michigan. Stay vigilant and safe!
Source: Statista, from 3/25/21
14. Remember the Clinton-Trump election when Pharma and Biotech were the greedy SOB’s? Now they are our saviors. Balance and fairness…
Source: The Daily Shot, from 3/25/21
15. We wish the crews trying to free one of the busiest waterways in the world good luck and speed in clearing the Suez!
Source: The Daily Shot, from 3/26/21
Disclosure: The charts and infographics 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 they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.