It appears to be more of the same for this mid-week update. The predictable cycle of forward guidance regarding more economic stimuli, in order to combat the fear of unemployment numbers, and the containment of COVID-19. The desired outcome being sufficient reassurance to consumers to help ignite the economic bounce back.
US sales data published earlier in the week was an early indication of the resilience of consumers, showing a positive surprise from the forced savings that have been accrued during lockdown. American consumers pushed May’s retail sales report to a record 17.7%, smashing through the expected rebound of 8.4%. This has seen over 60% of the loss accumulated through January to April recouped in May.
However, we must remember that the bounce was from a depressed seven-year low and the retail sales trend at an annual rate is still significantly in the red. Context is everything, especially during more volatile periods.
Monitoring the reaction of markets to the rising number of virus cases is critical, as straight-line extrapolation creates opportunities, especially when central banks and governments are willing to underwrite extreme volatility.