As coronavirus cases continued to surge, fixed income yields ground tighter while US equities ended the week slightly lower. Stocks had been higher earlier in the week, but reversed course following Thursday's worse than expected jobless claims report. Weekly claims for first-time unemployment benefits rose for the first time since March to 1.4 million, demonstrating the fragility of the labor market.
With federal unemployment stimulus payments scheduled to end this coming week, market participants are very concerned that the economic conditions will take a turn for the worse without additional support. One positive economic highlight for the week was June's existing home sales, which rebounded from the steep declines in April and May as lower mortgage rates combined with the tepid economic recovery to boost the housing sector.
Going forward, all eyes will be on Washington D.C., as the 16.2 million still receiving unemployment assistance face a stark reduction in benefits on 7/31.