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Chief Economist Scott Brown discusses the latest market data.

Real GDP fell 9.5% in 2Q20 (a -32.9% annual rate), by far the steepest decline on record. Weakness was broad-based, but especially pronounced in consumer services, transportation equipment, and energy exploration. Personal income figures were mixed in June, but spending rose 5.6%, pointing to strong growth in 3Q20. Durable goods orders were stronger than expected in June, reflecting a sharp increase in motor vehicles. The Conference Board’s Consumer Confidence Index declined, with a sharp pandemic-related drop in expectations.

The Federal Open Market Committee left short-term interest rates unchanged – no surprise. The policy statement was a near photocopy of the one in June, but added that “the path of the economy will depend significantly on the course of the virus.” In his press conference, Chair Powell noted the increase in COVID-19 cases and cautioned that “we have seen some signs in recent weeks that the increase in virus cases and the renewed measures to control it are starting to weigh on economic activity.” He stressed the need for ongoing government support.

Next week, July economic figures begin to arrive, with a focus on the ISM surveys and the employment report. Investors tend to focus on the headline payroll figure, but there’s often a lot going on under the surface, particularly now. Some of the jobs lost in March and April should continue to come back in July, as they did in May and June. However, the elevated trend in weekly jobless claims suggests that there are ongoing job losses in the broader economy. There is a lot of uncertainty in the monthly figures, especially in July, when we typically shed 1.3 million education jobs. Many of those jobs were likely lost earlier this year, which would result in a seasonally adjusted increase in July.  

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 07/31/2020

As of close of business 07/30/2020

S&P Sector Performance (YTD) – 07/31/2020

Economic Calendar

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Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business July 30, 2020.