I hope this finds you and your family healthy and safe!
We are at the midpoint of 2020, and it would be an understatement to say it’s been a challenging year so far in the United States and around the world. We’ve faced health, social, and economic crises that continue to impact our communities and our economy.
That’s why we’re looking ahead for new ways to face these challenges together and to prepare now for better times ahead.
At Curo Private Wealth, we know the stock market is forward-looking: It focuses on what’s happening today and what it sees on the path ahead. Much of the real-time economic data we follow—such as transportation activity, home sales, and jobless claims—is showing tangible evidence that economic activity—while still depressed—has begun to make a comeback. The path of the economic recovery remains uncertain but based on the deep impact and multi-staged recovery, we expect a contraction in gross domestic product (GDP) in 2020.
Already stocks are pricing in a steady economic recovery beyond 2020 that may be supported if we receive a vaccination to end the COVID-19 pandemic. However, the optimism we see in the S&P 500 Index now may limit the size of the gains over the rest of the year.
Turning to the bond market, we expect interest rates to head higher over the rest of 2020 but remain near historically low levels. Some analysts, including LPL Research, are calling for a year-end forecast of 1–1.5% on the 10-year US Treasury yield. If realized, this would be the lowest interest-rate level on record to end a year.
It’s still going to be a challenging environment with significant uncertainty that may lead to more volatility for the next few months, especially with the highly anticipated presidential election in November. But here’s the thing: all of our clients are investing for decades and even generations, so we must remain focused on our long-term goals, and not let the temporary fluctuations of the markets derail those plans.
As always, thank you for the trust you place in my team and me. Please reach out with any questions.
All my best,