Week Ending: June 19, 2020
U.S. stock prices advanced as investor sentiment and favorable economic reports supported risk assets. Small and medium sized businesses delivered mixed performance; however, a clear preference for growth stocks was evident, regardless of company size. Higher growth sectors such as technology outperformed while more defensive sectors such as real estate and utilities declined for the week. Developed foreign stocks in Europe and Asia outperformed U.S stocks for the third consecutive week while Emerging Market stocks lagged developed foreign markets.
U.S. Treasury yields were mostly flat for the week (bond prices and yields move in opposite directions) as Fed Chair Jerome Powell testified before Congress and made the case for additional fiscal stimulus to support economic growth. Corporate bonds outperformed after the Federal Reserve announced that it will begin buying a broad portfolio of U.S. corporate bonds. Investment grade corporate bonds are yielding approximately 2.2% and high yield corporate bonds are yielding more than 6%.
Initial jobless claims rose by another 1.5 million last week and there are nearly 20.5 million Americans claiming ongoing unemployment benefits. The Bank of England increased its bond-buying program by GBP 100 billion while Japan reported that the country’s exports declined 28% year over year.