According to Department of Labor, initial jobless claims decreased to 963K from 1,191K ending a 20-week streak of results above 1 million. However, investors are concerned if job gains recovers, fiscal booster of giving extra $600 (stimulus package) will decline.
The S&P 500 has flirted with record levels in recent days but ended Thursday’s session down 6.92 points, or 0.2%, at 3373.43, still within 0.4% of its Feb. 19 record. The Dow Jones Industrial Average dropped 80.12 points, or 0.3%, to 27896.72, while the tech-heavy Nasdaq Composite index rose 30.27 points, or 0.3%, to 11042.50.
The yield on the 10-year U.S. Treasury note ticked up for the fifth straight session, to 0.714% Thursday from 0.669% a day earlier amid weak demand in a $26 billion auction of 30-year bonds. (Bear Steepening: 30-year bond yield has climbed due to less than expected demand for Conversion Issue)
In commodities, gold rose 1.1% to $1,956.70 a troy ounce as the volatility seen in recent days continued. “We keep gold because there are still uncertainties, real rates are low, inflation may be higher than expected,” said Luc Filip, head of private banking investments at SYZ Private Banking.
According to Professor Jeremy Siegel, bond yields will go higher in 2 or 3 years due to inflation. Investors will not seek for safe-assets, which means they will find riskier assets that compensate by providing higher returns. Inflation hedge assets such as Gold or TIPS can be one of them, stocks or high yield corporate bonds will be another.
Source 1: Weekly Unemployment Claims Drop Below One Million for First Time Since March
https://www.wsj.com/articles/unemployment-benefits-weekly-jobless-claims-coronavirus-08-13-2020-11597280120?mod=hp_lead_pos3
Source 2: Stocks Close Lower Despite Fall in Jobless Claims
Source 3: Global Monitor Morning Brief
Source 4: I think we're going to have a spending boom in 2021: Wharton finance professor
https://www.youtube.com/watch?v=4oTFgqCXcyY
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