A Very Challenging Year Ends With Encouraging News

This insightful monthly market commentary will help you look beyond the headlines to better understand what is driving the current market trends that could impact your credit union’s investment portfolio.

 
 

We have finally (and thankfully) reached the final month of 2020. This challenging year is ending with encouraging news on the COVID-19 vaccine front. Pfizer and Moderna have both reported trial results that were approximately 95% effective, and as of November 30, both companies have applied for emergency authorization from the Food & Drug Administration. It seems like years have passed since the November 3 election day, and despite the noise surrounding the results, financial markets have responded more rationally. Looking ahead to 2021, should we expect more of the same? Or will the economic and market landscape materially change? While the vaccine news is clearly a positive, there are still questions regarding the timing, distribution, and usage rate among the population for any approved vaccines. Further, even with a vaccine in place, how long will it take for consumers to return to “normal” habits, particularly as it relates to travel and leisure?

November At-A-Glance

  • A very challenging year ends with positive developments on the COVID-19 vaccine front, but the recent surge in cases has triggered fresh restrictions in parts of the United States.
  • Markets have been well-behaved in the wake of the November 3 election, and the Treasury curve flattened from pre-election levels once a “blue wave” appeared a lesser probability.
  • The November 5 FOMC minutes included discussion of enhanced guidance for any changes to future asset purchases.

In the meantime, we are seeing record levels of new COVID-19 infections and hospitalizations amid a second wave in Europe and the United States, which is sparking fresh restrictions and lockdowns from various state and local governments. The near-term economic outlook will depend heavily on what, if any, bridge support Congress provides in the form of fiscal aid. Senate Republicans and House Democrats appear unable to reach an agreement in Q4, and as such, economists at some firms, including J.P. Morgan, are projecting negative GDP growth in Q1 2021. Jobless claims rose for two consecutive weeks in November (for the first time since July), and if the November jobs report shows a pause in the labor market recovery, there will likely be increased political pressure on Congress to get something done sooner rather than later. If not, we may hear the phrase ‘double-dip recession’ more regularly in economic forecasts.

Read more about the latest economic data and overall market trends here.

This market overview is provided by ALM First Financial Advisors, LLC, the investment advisor for Trust for Credit Unions. Read more from ALM First about the latest economic data releases and overall market trends at Trustcu.com.

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Dec. 7, 2020


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