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October 2020
Market Update
(all values as of 06.28.2024)

Stock Indices:

Dow Jones 39,118
S&P 500 5,460
Nasdaq 17,732

Bond Sector Yields:

2 Yr Treasury 4.71%
10 Yr Treasury 4.36%
10 Yr Municipal 2.86%
High Yield 7.58%

YTD Market Returns:

Dow Jones 3.79%
S&P 500 14.48%
Nasdaq 18.13%
MSCI-Europe 3.72%
MSCI-Pacific 3.05%
MSCI-Emg Mkt 6.11%
US Agg Bond -0.71%
US Corp Bond -0.49%
US Gov’t Bond -0.68%

Commodity Prices:

Gold 2,336
Silver 29.43
Oil (WTI) 81.46


Dollar / Euro 1.06
Dollar / Pound 1.26
Yen / Dollar 160.56
Canadian /Dollar 0.73

Macro Overview

Investment markets in September were pressured by concerns over a second wave of infections heading into the fall, election uncertainties, and wavering economic indicators.

Equities paused their upward trajectory in September, with technology stocks retreating from their highs. Uncertainty surrounding vaccine deployment and the election are expected to influence market momentum and investor confidence. Election results will help provide clarity on the direction of fiscal policy and social program funding.

A growing number of pharmaceutical companies, universities, and biotechnology firms are introducing and testing various forms of vaccines to combat COVID-19. According to the Regulatory Affairs Professional Society (RAPS), there are currently over 40 COVID-19 vaccines in trial phases worldwide.

California became the first state to require that all new autos sold be zero-emission by 2035. The executive order issued by the state’s governor is expected to reverberate throughout the country, potentially leading other states to follow suit.

The Centers for Disease Control and Prevention (CDC) issued detailed guidance for this year’s Halloween season. This guidance includes advice to refrain from substituting a costume mask for a cloth mask, avoid crowded costume parties and indoor haunted houses, and refrain from traditional door to door trick-or-treating.

With some schools resuming across the country, the CDC reported that COVID-19 cases occurring with individuals 19 years of age and younger have risen three-fold since May. The large increase may suggest that younger people may play an increasingly important role in community transmission, even if their risk of serious illness is low relative to the older population. The threat of a second wave of infections brought about by COVID-19 has been compared to the fall of 1918, when the second wave of the Spanish flu pandemic was more severe than the first.

Comments by Fed Chairman Jerome Powell indicated that additional aid to small businesses and unemployed individuals was critical for economic expansion during the pandemic. The Fed Chair urged for the passage of a second stimulus package, which has been delayed due to a Congressional impasse.

Banks and other financial firms are imposing increasingly stringent standards for consumer and business borrowers, as noted by the Fed’s Senior Loan Officer Survey. The survey identified reductions in credit card limits, as well as tougher qualifications for auto and home loans. (Sources:, CDC, Federal Reserve, World Bank,

The fed purchases $120 billion of Treasury and mortgage bonds each month

Equities Taper Off In September – Domestic Equity Overview

Equities managed to end the third quarter in positive territory despite a pullback. The technology sector was the primary contributor to gains in the S&P 500 Index, which was up 8.93% for the third quarter. Consumer discretionary and industrial stocks performed well during the quarter, typical of economic recovery characteristics.

Following an upward surge this summer, September witnessed a tapering of equity momentum, leading to lower valuations. The three major equity indices – Dow Jones Industrial, S&P 500 Index, and the Nasdaq – were off in September, but positive for the third quarter ending September 30th. (Sources: S&P, Bloomberg, Dow Jones, Nasdaq)

Rates Fluctuate As Stimulus Efforts Unresolved – Fixed Income Overview

The Federal Reserve purchased $120 billion of Treasury and mortgage agency bonds each month, expanding its balance sheet to over $7 trillion as of the end of September. The extensive purchase activity is intended to facilitate bond market activity while maintaining a relatively low-rate environment.

Yields on government and corporate bonds vacillated in September as uncertainty regarding additional stimulus efforts influenced rates. Analysts and economists expect higher eventual long-term rates as a result of the incremental debt issuance required to pay for the next stimulus package. (Sources: U.S. Treasury, Federal Reserve, Bloomberg)

Industries That Are Experiencing Higher Unemployment Due To The Pandemic – Labor Market Overview

The most recent labor statistics made available by the U.S. Department of Labor identified more significant increases in unemployment in certain industries than others. Economists and analysts ascertain that the year-over-year increases in unemployment are attributable to the pandemic, as mandatory closures and restrictions continue to hinder business operations and consumer activity.

Unemployment is affecting various occupations differently, as the impact of the pandemic displaces certain workers more than others. Economists estimate that the disparity enhances the negative impact on low-income workers in particular.

Industries including construction, motion pictures, hotel & leisure, and restaurants saw the most dramatic increases in unemployment relative to a year prior. Hospitals and health services experienced the lowest increases in unemployment, thus exhibiting resistance to the pandemic environment.

Source: U.S. Department of Labor


17% of all FHA-insured loans were delinquent in July of this year

Projections For The Housing Market – Housing Market Update

The potential fragility of the housing market is gradually coming to light. The FHFA House Price Index revealed that housing prices nationwide rose a paltry 5.4% in the past year, with some regions seeing much slower growth.

The onset of the pandemic in March brought a flurry of fiscal and monetary stimulus efforts intended to ease the financial burden for millions of Americans. Housing was a primary concern as the unemployment rate spiked and paychecks dwindled. In response, the Federal Housing Finance Administration (FHFA) announced a moratorium for both evictions and foreclosures through August 31, 2020. That moratorium has since been extended to the end of the year to allow homeowners additional time to sort out and catch up on their rent and mortgage payments.

Any federally backed loans, such as FHA-insured loans, have allowed homeowners to skip their mortgage payments by means of forbearance. According to the Mortgage Bankers Association, roughly 3.5 million home loans were in forbearance as of September 6th, representing 7.01% of all FHA-insured loans. It is expected that millions of homeowners on forbearance will become delinquent on those loans by the end of 2020, including many homeowners who have not made a payment since March of this year. Another government housing entity, the U.S. Department of Housing and Urban Development (HUD) tracks loans in delinquency via its Neighborhood Watch list. The data reported that 17% of all FHA-insured loans were delinquent in July of this year. The figure includes mortgages in forbearance as well as those not in forbearance.

Sources: Federal Housing Finance Administration, Mortgage Bankers Association, U.S. Department of Housing and Urban Development

current savings rate of 25.7% is nearly triple of the 60-year average

Americans Saving More Amid Pandemic – Consumer Behavior

Store and restaurant closures prompted consumers nationwide to stay home, spend less, and save more. The average savings rate for the past 60 years has been 8.9%. The savings rate jumped from 8.4% in February this year to 32.2% in April as the impacts of the pandemic took hold of the U.S. economy. The most recent data release shows the savings rate at 25.7% for the quarter ending June, nearly triple the 60-year average.

Economists view the heightened level of savings as restrictive to a sustained economic expansion. Since nearly 70% of GDP is represented by consumer expenditures, higher savings tend to reduce overall economic activity. A decrease in consumer confidence historically tends to increase savings and minimize spending. (Source:

California To Become First State To Require Zero-Emission Vehicles – Auto Industry Overview

The governor of California issued an executive order in September requiring that all automobiles sold in the state must be zero-emission by 2035. The announcement gives auto manufacturers 15 years to transition from gasoline and diesel engines to zero-emission engines. The state order did not specify what form of zero-emission engines would be required. Sales of used gasoline-powered vehicles, however, would still be allowed. California has become the first state to require a transition from gasoline to zero-emission vehicle sales, essentially banning new non-zero-emission vehicle sales. The new requirement may eventually affect other states as California has traditionally set trends with environmental regulations nationwide. Auto manufacturers will have to convert and expand production to produce the demand expected for zero-emission vehicles over the next 15 years. As of August 2020, there were only 543,610 registrations nationwide for electric automobiles, representing less than one percent of the 273.6 million vehicles currently registered in the United States. California has historically been the largest zero-emission auto market in the country, with Oregon and Washington states a distant second and third, respectively.

In response to California’s executive order, the Environmental Protection Agency (EPA) argued that the mandate is impractical and possibly illegal under current Federal legislation. The EPA noted that California, like some other states, is already suffering from rolling blackouts, affecting residences and businesses statewide. The additional electric automobiles would impose additional strain on the electric grid, further crippling its ability to efficiently distribute energy, according to the EPA’s argument. (Sources:, U.S. Department of Energy)