Weekly Market Insight

Latest Economic & Market Update 22nd May 2020

22nd May 2020

Good afternoon, it is 22nd May 2020 and here is your economic and market update from BlackBee.

Today we are going to focus on:

  • FED support is driving yields lower
  • ECB Bond buying boosts confidence
  • US Unemployment continues to rise

GRAPH OF THE WEEK: FED support drives yields lower, despite increase in downgrades

Source: Bloomberg, May 2020
Standard & Poor’s credit rating downgrades have seen a huge jump in Q1 and Q2 of 2020. The ratio of credit rating upgrades to downgrades hit as low as 0.03 in Q2. In the same period last year, the ratio was 0.62. The dramatic increase in downgrades accompanied by the significant fall in upgrades represents the vulnerable economic outlook and can be a leading indicator for defaults. Despite this, yields on investment-grade bonds and junk-rated bonds have declined since highs in March. FED support for bond markets has heavily influenced the decrease in yields.
At a glance:
  • Unemployment claims in the US reached 38.6 million as 2.4 million Americans applied for benefits last week.
  • The increase in the ECB’s bond-buying programme has improved confidence, as Italy sells €22 billion of debt with over nearly €14 billion accounted for by retail investors.
  • The Bank of England is now reviewing negative interest rates despite the BoE Governor stating last week that the BoE was not going to consider negative rates.

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

Global Market Update
(as at close of markets 21/05/2020)