Back in mid-June, we noted five reasons why investing in European equities might finally pay off . One of the reasons was that Europe had crushed its COVID-19 curve and had better success than the U.S. in breaking the link between reactivating economic activity and rising infection rates. Unfortunately, daily new COVID-19 cases have begun to rise again in Europe, especially in Spain and France, to levels not seen since mid-April. This begs the question, does the recent resurgence in new cases derail the European investment story?

For investors, while the announcement does provide further clarity on future Fed action, it does not suggest any changes are warranted in portfolios currently.

While markets are likely to experience volatility in the lead up to and the aftermath of the election, ultimately, it’s policy, not politics, that matter most for the economy and markets in the long run.

Loss aversion refers is the preference to avoid losing compared to gaining an equivalent amount. Simply put, it is better to not lose $1000 than it is to find $1000.

Together, greater duration supply and less Fed buying suggests yields may drift higher through the back half of the year.

Last week, we learned that the unemployment rate fell to 10.2% in July. This week, initial claims for unemployment insurance fell below one million for the first time since March, and retail sales eclipsed the pre-pandemic levels seen earlier this year. 

It has become a near daily occurrence to awaken to headlines stating that “tensions between the U.S. and China are rising”. Indeed, tensions between the two countries have risen this year, a less positive example of a pre-pandemic trend that has gotten further amplified in the COVID-19 world.

The global economy appears to be in the early innings of recovery, while simultaneously staring down the limitations to growth in a pre-vaccine world.