The Global CIO Weekly - Does that change everything?
The massive surprise in the US unemployment data should not be seen in isolation. The bears can easily dismiss this as just an aberration. Other data tends to corroborate the belief that the US recovery has started, and has maybe more momentum than previously thought. Indeed, that recovery is not just focused on the United States but better than expected Canadian employment data and signs of improved demand in Europe will all give further impetus to risk assets.
The better employment data, the ongoing lifting of the lockdown around the world, and announcements of further support for growth through easing monetary conditions and additional fiscal measures will only reinforce the positive mood in the markets. For sure there are risks ahead; a second wave of the virus, defaults rising, social distancing hampering the full recovery of many industries. However, for the moment, the momentum is with risk assets as economists eye a possible 25-35% annualised recovery in global GDP in the third quarter.