Please find the latest edition of Weekly Digest attached.
There have now been over ten million cases of COVID-19 globally, with over 500,000 fatalities. The number of cases is rising at a faster rate than the number of fatalities, which is partly a reflection of increased levels of testing. A study carried out by the University of Oxford found that the hospital fatality rate in England fell from 6.0% to 1.5% between April and June, suggesting that we are getting better at treating the virus. The IMF published its Economic Report last week, in which it revised its global growth forecasts for 2020 down from -3% in the April report to -4.9%. In the Mail on Sunday, Boris Johnson explicitly rejected a return to austerity in the UK post-COVID.
Infections in the US have re-accelerated and weekly new COVID cases in the country reached a new high over the weekend. It is worth mentioning the regional differences in the US. Cases in the Northeast have stopped increasing, while they are still increasing across the rest of the US. The South and West now account for the vast majority of new cases in the US and are growing. This has resulted in Texas, Florida and Arizona pausing or rolling back re-opening measures (see Leicester now in the UK of course).
According to analysis by JP Morgan, one of the strongest predictors of the rise in new virus cases in the US over the past three weeks was the level of spending at restaurants three weeks before that:
Despite the evidence of a second wave, GDP-type measures still point to a continuing recovery in the US. The NY Fed’s weekly economic indicator shows that the US economy is now running at -7.7% year-on-year, up from -8.6% the week before:
The second wave of infections in the US has corresponded with the betting market attaching an increasingly high probability to Mr. Biden’s prospects in the US election in November. At the latest pricing, the betting market is pricing in an above 60% probability of Mr. Biden winning. However, Mr. Trump’s declining election prospects are also increasing pressure on his administration to further spur the economy. Mr. Mnuchin, the Treasury Secretary, has publicly suggested that another stimulus package is on the way, this time worth $1 trillion.
Brexit talks resumed yesterday and were followed by the release of UK Consumer confidence data and Euro Area inflation reports today. Tomorrow sees the release of the minutes from the latest meeting of the Federal Reserve along with final Pan-Europe (including the UK) manufacturing and services data for June. On Thursday, we have the release of US and Euro Area employment data while Friday will be a holiday in US financial markets.