Market Overview


  • During the 3rd quarter, risk assets continued their rally, with the S&P 500 returning 8.9% and U.S investment grade corporate bonds returning an excess of 1.37% over U.S. Treasuries on an index level;

  • International developed market equities, MSCI EAFE Index, underperformed the S&P 500 by 4% for the quarter as economies globally, but mainly struggle amid a rise in Covid-19 cases;

  • Improving economic data coupled with the liquidity being provided by the Federal Reserve acted as a powerful tailwind to these assets over the quarter;

  • In August the Federal Reserve adopted "Average Inflation Targeting", which would aim to return the average of inflation over some period to the 2% target, which could let inflation run hot to compensate for long periods where it has been under 2%;

  • Despite this announcement, the yield curve remained relatively stale throughout the quarter, with the spread between 2 year notes and 30 year bonds widening 7 basis points;


  • Over the next two months, we expect for the first time since February that the Coronavirus Pandemic will take a backseat to the upcoming U.S. Presidential election;

  • The race between Trump and Biden is too close to call in our opinion, but the one outcome we are fairly confident in is that the Democrats will retain control of the U.S. House of Representatives;

  • In addition, our analysis suggests that there is greater than a 50% chance that the outcome of the Presidential race will be delayed, and a lesser chance that it will be challenged;

  • Another round of fiscal stimulus within the first half of the 4th quarter is necessary in order to keep the recovery going, but we expect there will be political headwinds to this surrounding the election;

  • We currently find it most prudent to be duration neutral given that election outcome is uncertain, and the large moves possible in either direction;

Corporate Bankruptcies Rising

Corporate Bankruptcies Rising 


Single Family Home Construction at 13 Year High


Single Family Home Construction at 13 Year High 

Permanent Job Losses Rising Faster than
During the 2009 Financial Crises

Permanent Job Losses Rising Faster than During the 2009 Financial Crises


Return to Top