September 2020 Market Wrap

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U.S. President Donald Trump and First Lady Melania Trump were tested positive for COVID-19 last Friday, a surprising twist of developments that came after the chaotic first presidential debate and with a month to go before the Nov 3rd U.S. election. Together with the ongoing coronavirus stimulus discussions, the markets ahead will be watching these two events closely than the actual economic numbers.

Coronavirus cases spiked across Europe, as fears of a second wave gradually materializes over the course of the month, eventually leading to an actual lockdown in Madrid, with Paris looking to follow next. This puts a serious dampener in the otherwise promising recovery of the Eurozone’s economy. Brexit negotiations continue to face significant obstacles with no clear prospects of a trade deal, and time is running out with the EU maintaining its stance to have an approved trade agreement with the UK by Oct 15, for the European Parliament to have sufficient time to ratify the deal and for it to take effect by Jan 1, 2021.

Given expectations for a slow recovery in demand amid pandemic containment efforts, central banks around the world have left key rates unchanged: FOMC left fed funds rate at 0%-0.25%, ECB kept deposit rate negative at -0.5%, BoE maintained bank rate at 0.1% whilst BoJ left short-term rate negative at -0.1%. Global monetary policies are expected to remain loose into 2021, with risks skewed toward further easing.

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