Jurrien Timmer, Director of Global Macro, provides his weekly market commentary and global macro update. Jurrien believes the Federal Reserve has learned from the past. The nominal ten-year yield in the U.S. has flatlined at about 10%, and he doesn’t think we should expect a rate increase for several years. He notes that real yields are falling, which he is bullish on. It appears that investors like what they see in terms of nominal policy response. That is the opposite of what happened in the early 30s. It’s earnings season, and Jurrien continues to express a positive outlook on earnings, despite projections flatlining because companies are unable to make accurate predictions. He notes that future earnings will likely depend on the progression of COVID-19. Reflecting on the recovery, Jurrien thinks it is unlikely that we will recover to pre–COVID-19 levels without a vaccine, and that the longer this goes on, the more likely we’ll have an insolvency issue, and that things will start to look more like 2009. If we continue to experience waves of the virus, then it is possible the recovery will not rebound to its full potential.

Recorded on July 27, 2020.