Stocks Fall; Treasury Yields Hit Eight-week High

US equities pulled back from the cusp of record highs as investors mulled the stalemate in stimulus negotiations and signs of an economic recovery. Treasury yields rose a fifth day and crude oil declined. The S&P 500 fell by 6.9% to 3,373.43 while Dow Jones was down 80.12 points (0.29%) to 27,896.72.

US Economic Hole Remains Deep Despite Jobless-claims Milestone

The number of Americans applying for unemployment benefits fell below 1 million for the first time since the pandemic began in March, a milestone that underscores both the depth of economic damage and long road to recovery from the sharpest downturn since the Great Depression. The latest figure of 963,000 capped a steep two-week decline and is a fraction of the nearly 7 million filings at one point in March.

Europe Sees An Olive Branch in Latest US Tariff Move on Airbus

The US left largely intact its list of European products worth US$7.5bn targeted with tariffs because of illegal Airbus SE subsidies, opting not to follow through on a threat to substantially increase the economic pain on its transatlantic trade partners. In a statement in Washington, the US Trade Representative’s office said it was making “modest” changes to the list of products subject to tariffs, while leaving the overall amount of goods unchanged.

French Jobless Numbers Conceal Size of Shock to Labor Market

The plunge in French unemployment to 7.1% -- the lowest rate since 1983 -- conceals the start of what is set to be a prolonged labor market crisis in the euro area’s second largest economy. A measure of people who wish to work but are not counted as unemployed because they were unable to look for a job in confinement -- the so-called halo around unemployment -- rose to a record of more than 2.5 million.

South Korea’s Tech Exports Accelerate as Lockdowns Ease Globally

The rebound in South Korea’s technology exports accelerated in July, illustrating the pace of recovery in global demand as countries emerge from pandemic-induced lockdowns. Exports of information and communications products picked up 3.3% from a year ago, compared to a 1% rise in June, according to data from South Korea’s trade ministry. Technology exports had contracted in April and May as the pandemic kept large swathes of the globe in lockdown.

Thailand Premier Sees Worst Economic Crisis Lasting Through 2021

Thailand’s worst economic crisis on record will endure through at least the end of next year and the government is committed to supporting businesses overcome the blow from the coronavirus outbreak, according to Prime Minister Prayuth Chan-Ocha.The economic crisis we’re facing right now won’t go away anytime soon,” Prayuth said. Thailand’s economy is headed for its steepest contraction on record.

Philippines Joins EM Central Banks’ Unorthodox Bond-buying Club

The Philippine central bank is funding more of the government’s debt amid the pandemic as emerging markets turn to unconventional steps to finance record stimulus programs. Bangko Sentral ng Pilipinas purchased about 800bn pesos (US$16.4bn) of government debt, or 45% of the country’s domestic borrowings through the end of July, according to Bureau of the Treasury data.

Oil Drops With IEA Demand Outlook Pointing to Weakness Ahead

Oil fell the most in nearly a week as investors assessed the International Energy Agency’s reduced forecasts for global oil demand in part due to a slowdown in air travel. Brent crude for October settlement fell US$0.47 to US$44.96 per barrel

Source: Affin Hwang Research - 14 Aug 2020