📑 Research Notes for 2021-06-07
This week, we look at a new low in new U.S. COVID-19 cases, recent Fed actions, and the May employment report.
We conduct extensive investment research and share the most interesting content that we come across every week. Here is a curated list of this week’s top observations.
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COVID-19 Cases Hit Lowest Point in U.S. Since Pandemic Began.
(Axios)
The U.S. has brought new coronavirus infections down to the lowest level since March 2020, when the pandemic began. The U.S. averaged roughly 16,500 new cases per day over the past week, a 30% improvement over the week before. New cases declined in 43 states and held steady in the other seven.
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Fed to Sell Corporate Bonds and ETFs Acquired During Covid-19 Crisis.
(Wall Street Journal)
The Federal Reserve will soon begin selling off the corporate bonds and exchange-traded funds it amassed last year through an emergency-lending vehicle set up to contain the Covid-19 pandemic’s economic fallout.
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Reverse Repo, Fed Treasury Buying, and a Cash Glut Problem.
(Disciplined Systematic Global Macro Views)
Banks are awash in reserves and don't want the money. Money funds are seeing cash balances build and the Fed does not want to see negative interest rates. Hence, there is an extraordinary demand for reverse repo (RRP)Â which temporarily reduces money in exchange for Treasury collateral. The size of reverse repo has been at the greatest recorded and we are not in a crisis. These RRPs reverse the $120 billion in Fed purchases of Treasuries per month.
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Comments on May Employment Report.
(Calculated Risk)
The headline monthly jobs number was below expectations, however the previous two months were revised up by 27,000 combined. The headline unemployment rate decreased to 5.8%, but the participation rate declined slightly.
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Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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