June 24, 2020 - Market Update

Stocks opened lower after confirmed cases of the Coronavirus jumped in several states including: Arizona, Texas, and California, each experiencing new single day records on Tuesday.  Trade tension between the U.S and its European and North American allies may be on the rise after a long running dispute over government subsidies to aircraft manufacturers.  The White House said it was considering imposing tariffs on $3.1 Billion worth of products from the U.K., France, Germany, and Spain, targeting products such as olives and malt beer.  Re-imposing tariffs on aluminum imports from Canada was also mentioned and could be announced as early as the end of the week.  The International monetary fund projected that the global economy will contract 4.9% in 2020, a decline from the previous forecast of a 3% contraction.

Intermediate and long Treasury prices opened higher this morning, reflecting the softness in equity markets.  The 10-year Treasury is yielding 0.70%.  The IMF downgraded its outlook for the world economy, projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.  The fund said it now expects global GDP to shrink 4.9% this year, more than the 3% predicted in April.  For 2021, the IMF forecasts growth of 5.4%, down from 5.8%.  Having already warned of the biggest slump since the Great Depression, the IMF said its increased pessimism reflected scarring from a larger than anticipated supply shock during the earlier lockdown, in addition to the continued hit to demand from social distancing and other safety measures.  The IMF warned that the rebound in global financial – market sentiment “appears disconnected from shifts in underlying economic prospects,” raising the possibility that financial conditions will tighten more than forecasted in its core scenario