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Rising Coronavirus Infections Threaten Recovery

In a repeat of last week, rising levels of coronavirus infections overshadowed a mixed slate of economic releases, leading to uneven results in the financial markets.  US equities rose on the prospect for economic recovery while bond yields were only  slightly changed, as yields remainded near record lows. 

The week's early economic indicators were largely positive, as pending home sales in May rose strongly while consumer confidence rose.  Thursday's labor market data was  mixed, as a surge in payrolls pushed the unemployment rate down to 11.1%.  However, that unemployment rate excludes the 10 million Americans who exited the labor force this spring and have not yet returned. 

The week's jobless claims data was weaker than forecast as another 1.4mm American filed first-time claims for unemployment benefits last week, while 19.3 million continued to receive benefits.  Given the backward-looking nature of these releases, the current state of the economic recovery remains in question.

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