The Market Today

CORONAVIRUS UPDATE
VS Coronavirus Chartbook (PDF) (Link)
Vining Sparks MarketWatch Video (CLICK HERE)

TODAY’S CALENDAR

Quiet Start to Busy Week, Including Fed Policy Decision: There are no reports on the economic calendar this morning.  This will, however, be a busy week for economic data including the FOMC’s policy decision on Wednesday.  While we do not expect an explicit easing of policy this week, there are many levers the Fed will likely tweak.  We will specifically be watching for how the new policy framework, released during the Jackson Hole summit, will affect their guidance (Official Statement) and forward projections (Summary of Economic Projections).  As for the dot plot, this will be the first look at 2023 projections.  In the June dots, only two officials expected liftoff to occur by 2022.  We expect the median Fed Funds range projection for year-end 2023 to be 0.00-0.25%, but close to half of participants projecting liftoff during the year.

OVERNIGHT TRADING

AstraZeneca Vaccine Restarts and Japan Elects Abe’s Successor: Most global shares were higher Monday and U.S. futures were on the mend after tech stocks led to more volatility last week and another weekly decline (more below). While the biggest news may come later this week when the Fed and central banks from Japan and the U.K. announce their latest policy decisions, a number of noteworthy headlines from those countries were already making the rounds. Chief Cabinet Secretary Yoshihide Suga was elected to be Japan’s next prime minister after long-serving Prime Minister Shinzo Abe announced his resignation for health reasons several weeks ago. Mr. Suga is expected to keep most of PM Abe’s policies in place, at least in the near-term. In the U.K., AstraZeneca announced the resumption of its phase 3 trial after earlier pausing the testing after a patient became ill.

U.S. Futures Lead Most Global Shares Higher: While AstraZeneca trials remained paused in the U.S., the broader search for a vaccine stateside does not. Pfizer and BioNTech announced plans to expand their phase 3 trial and the former’s CEO was upbeat on the prospects for a safe vaccine before 2021. Pfizer’s chief said he’s “quite comfortable” the joint vaccine is safe, adding “I cannot say what the FDA will do, …But I think [a vaccine in 2020] is a likely scenario, and we are preparing for it.” After Asian markets posted solid gains, Europe’s Stoxx 600 erased an opening jump and was back close to flat on the day at 7:15 a.m. CT. The country continues to face an accelerating second wave in major countries. U.S. futures were solidly positive with contracts on the S&P 500 and Nasdaq both up more than 1%. Treasury yields had edged higher but were less than 1 bp changed.

NOTEWORTHY NEWS

ICYMI – September 11, 2020 Weekly Market Recap: Treasury yields fell last week and the curve flattened as the prior week’s tech rout persisted and continued to drive volatile equity markets. The Nasdaq fell more than 4% and into a correction Tuesday in its return from the Labor Day holiday, down 10.0% from the prior Wednesday’s record-high close. The S&P 500 flipped between gains and losses each day and finished the week 2.5% lower. The economic data was mixed but seemed to have little impact on the overall market tone. Small business confidence recovered more than expected and layoffs continued to decline in a solid July JOLTS report, although the more timely jobless claims data showed the pace of progress of the labor market recovery has leveled out. In other notable developments, the British pound ended the week down sharply as Brexit worries arose while the Euro held near its highest levels since 2018 following a less-dovish-than-expected ECB decision. In the U.S., Senate Democrats blocked the Republicans’ “skinny” aid proposal, increasing the odds that no additional stimulus will be agreed to before the election. Click here to view the full recap.