Joe Biden will be inaugurated in less than two weeks, and Democrats now control both the Senate and the House following this week’s elections in Georgia. That led to the hope that more stimulus would be a slam dunk.
“The ongoing fight against the pandemic is putting pressure on the real economy again,” said Charlie Ripley, senior investment strategist at Allianz Investment Management, in an email to CNN Business, “and despite what the financial markets are signaling, the job market is. indicating that there is still a way to go on the economic road to recovery. ”
“Congress’ ability to provide additional tax support has increased and today’s employment report beckons them to do just that,” added Ripley.
Investors are already looking through this temporary period of economic weakness and are instead turning to the brighter outlook where fiscal spending, monetary stimulus and mass distribution of the COVID-19 vaccines combine to quickly return the US economy to pre- pandemic path, ”said Seema Shah, chief strategist at Principal Global Investors, in a report Friday.
The Dow is up nearly 1% this week, while the S&P 500 and Nasdaq are up 1% and 1.4% respectively.
The hope of an economic recovery is one likely reason why bond yields are also recovering. The yield on the US 10-year Treasury recently rose above 1% for the first time since March, and gradually declined higher after the jobs report.
“The current job weakness may be transient,” Jim Caron, global fixed income portfolio manager at Morgan Stanley Investment Management, said in an interview with CNN Business.
“This data was not good, but investors are looking beyond recent volatility to better days ahead,” added Caron. He also noted that investors are realizing that the Federal Reserve is likely to keep interest rates around zero for several more years – perhaps until 2024.
Despite the weak jobs, there have been other signs of economic improvement lately.
The most recent ISM manufacturing report showed a continued recovery for many U.S. industrial sectors, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company.
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