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Daily Market Update

Latest Economic & Market Update 13th November 2020

Good afternoon, it is November 13th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • Equity pull back, treasury yields tighten
  • New cars licensed in October up 30% YoY, Consumer Price Index 1.5% lower

Equities in Europe and the US both retreated yesterday after a strong two-week performance. The S&P 500 closed 1.0% lower while Euro Stoxx 600 dropped by 0.88%. Following a two week rally, firstly caused by Joe Biden’s election victory and then by Pfizer’s announcement on Monday of a 90% effective vaccine, it is possible that investors will look to cash in on these gains. With potential US lockdowns to come, investors will be wary of further short term impacts to the stock market. The 10-year US Treasury yield tightened by just under 10 basis points to trade at 0.88%. Following the election and Pfizer’s positive sentiment, 10-year yields were at the highest levels since March. Despite yesterday’s tightening, over the last 2 weeks, the spread between 10 and 30-year US treasury yields has started to widen. It is currently c.75 basis points, its highest level since September and before the reality of a second wave of Covid-19 in Europe and the US became a realistic proposition for traders. When the spread widens, the yield curve begins to steepen and it typically indicates stronger economic activity and rising inflation expectations. (Source: Bloomberg)

Just under 4,200 new private cars were licensed in Ireland this October, a 30.3% increase from the same period last year. Approximately 82,000 new cars have been licensed by the end of October 2020 year to date, 26.2% lower than the same period in 2019. The Consumer Price Index continues to contract and prices are on average 1.5% lower in October 2020 compared with October 2019. The pattern of Irish consumer spending this year is naturally so unique given the restrictions on businesses that are allowed to operate. Hospitality and retail are two sectors currently suffering with level 5 restrictions and current rules for level 3 only allow for 15 people of outdoor seating at a given time in a food serving business. Under level three, travel is restricted to stay within one’s county (other than for work, education or medical purposes). Government policy is a fundamental factor in how Irish consumers channel their expenditure. When the opportunity arises for consumers to go to restaurants and hotels, it will be interesting to see how new cars licensed for that period compares with the same period one year previously. (Source: CSO)

Best & Worst Performers of Large Cap US Stocks on Thursday
Click image to enlarge

Global Market Update
(as at close of markets 12/11/2020)