Investor interest in government bonds as a safe haven continues to grow. This trend is understandable considering the increasing worries about a slowing US economic recovery, the deteriorating state of US-China relations, and the ongoing struggle to contain the coronavirus in America. Collectively, these factors contribute to a solid belief that purchasing Treasuries, despite their record low yields, is still a wise investment choice.
Senate Republicans and the White House are poised to present a new relief bill: Roll Call
Trump plans to deploy “a surge” of federal security forces in US cities: BBC
Could we anticipate an October surprise regarding a Covid-19 vaccine? Politico
China is expected to retaliate following the US decision to close its Houston consulate: CNBC
FBI reports that China is sheltering a military-linked fugitive scientist in California: CNN
Portland experienced another night of unrest as the mayor was affected by tear gas: Reuters
US unemployment claims remain high, indicating a cooling recovery: WSJ
Better-than-expected corporate earnings bolster European stock prices: Reuters
US existing home sales surged by 21% in June—the highest monthly increase on record: CNBC
In the realm of US fixed income, year-to-date gains remain prominent. With the exception of junk bonds, nearly all other American bond sectors are experiencing a bull run through the close on July 21, evidenced by various exchange-traded funds.
Trump indicates that the Covid-19 crisis may ‘get worse before it improves’: CNN
The Trump administration is considering expanding federal law enforcement presence in cities: Politico
The US forces China to shut down its Houston consulate: NY Times
Economists predict that the economic impact of Covid-19 will persist even with a vaccine: CNBC
Key timelines regarding the expiration of coronavirus support programs globally: BBG
Economists are in favor of extending the $600 weekly payments for unemployed workers: 538
The Senate banking committee approves Shelton and Waller for Federal Reserve positions: CNBC
Japan’s Composite PMI for July indicates significant economic contraction: IHS Markit
The Chicago Fed National Activity Index shows ongoing indications of economic recovery: CF
The upcoming release of preliminary US GDP data for the second quarter is anticipated to be alarming. Is a recovery on the horizon for Q3?
Three vaccine developers share promising initial findings: NY Times
The US bans 11 Chinese companies from acquiring American technology products: NY Times
Trump may dispatch more federal law enforcement agents to major US cities: BBC
The UK terminates its extradition treaty with Hong Kong: CNN
The European Union agrees to a $859 billion stimulus package for the coronavirus recession: BBC
Chevron is set to acquire Noble Energy, the largest energy deal in the US since the oil crash: CNBC
Turkey surpasses Russia as the world’s largest buyer of gold: Nikkei Asian Review
The S&P 500 edged higher on Monday, closing above its previous post-correction peak:
International equities in developed markets outpaced other major asset classes last week, showing impressive gains based on a variety of exchange-traded funds. With a nearly 2% increase for the trading week ending on July 17, this market segment reached levels close to a post-correction high.
Trump hints at the possibility of not accepting the results of the 2020 election: CNBC
The Trump administration is aiming to reduce funding for coronavirus testing: ABC
A protein treatment trial is hailed as ‘a breakthrough’ for Covid-19: BBC
Controversial Fed nominee Judy Shelton faces a Senate vote this week: NY Times
The success of economic recovery is tied to effectively managing pandemic flare-ups: WSJ
Analysts predict that government spending will rise to support affected businesses: CNBC
Investment managers are seeking opportunities in the struggling small-cap stock market: Reuters
Gold prices are poised for a new record high, according to Citigroup analysts: Bloomberg
Consumer sentiment in the US declined in July, impacted by concerns over the coronavirus: UoM
US housing construction continued to show signs of rebound in June: CNBC
The 5-Year Treasury TIPS real yield falls below -1% for the first time since 2013:
● Underwater: How Our American Dream of Homeownership Became a NightmareRyan Dezember
Review via The New York Times
The debate surrounding homeownership as a goal for all Americans is worth exploring. However, this shift should not be imposed by profit-driven companies on individuals who have the capacity to own their homes. As Dezember points out, “If homeownership falls out of favor for even a generation, dire economic consequences may follow unless renters evolve into careful savers and wise investors.” In essence, this could lead to a retirement crisis.
The Smart Beta Mirage
Shiyang Huang (University of Hong Kong), et al.
June 2020
This study highlights a significant decline in the performance of smart beta indexes post the launch of corresponding smart beta ETFs. When adjusted for overall market returns, the average return of these indexes drops from 2.77% annually “on paper” before ETF launch to −0.44% annually after their introduction. This decline cannot be attributed to strategic timing or trends in factor premia. Evidence suggests data mining during the creation of these indexes, as performance deteriorates more sharply for those indexes more prone to data mining in backtests. These findings serve as a cautionary note regarding the risks of data mining in the increasing number of ETF offerings as investors react to attractive backtest results.
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