This Weekly Market Update reviews the top three market headlines; U.S. Dollar Continues to Weaken, Chapter 11 Bankruptcies Surge in First Half of 2020, European Union Reaches Deal on Recovery Plan

Data Points

  • The U.S. dollar has fallen nearly 8% since late March
  • Chapter 11 business bankruptcies were up 26% in first half of 2020 from last year
  • European Union leaders agreed to a €750 billion recovery plan
 
Top Three Market Headlines


U.S. Dollar Continues to Weaken: Continuing a months-long trend, the value of U.S. dollar, measured against a basket of foreign currencies, fell again last week. The dollar, which is down approximately 8% from late March, has been pressured lately by a combination of factors, including the substantial monetary stimulus measures adopted by the Federal Reserve, the emergence of negative real (or inflation-adjusted) interest rates in the U.S., and faster progress among many foreign countries in easing COVID-19-related restrictions. The softening dollar has spurred rallies in other asset classes, particularly precious metals: gold futures last week rose to nearly $1,900 an ounce, their highest level in nearly nine years.

Chapter 11 Bankruptcies Surge in First Half of 2020: Amid a challenging economic environment brought about by the coronavirus pandemic, U.S. Chapter 11 business bankruptcy filings increased 26% in the first half of this year compared to last year, and were up 43% in June alone. Bankruptcy-related job cuts this year have been felt particularly acute in the retail, services, entertainment, and leisure industries, with such high-profile names as J.C. Penney, Hertz, Neiman Marcus, and J. Crew among the companies that have recently declared bankruptcy. Industry experts fear a further rise in both Chapter 11 filings and job cuts in coming months as federal relief funds run out for small and midsize businesses.

European Union Reaches Deal on Recovery Plan: In an effort to boost Europe’s recovery from the COVID-19 pandemic’s economic fallout, European Union (EU) leaders agreed last week on a €750 billion aid package. €390 billion of funds will be issued to EU-member countries in the form of grants, with the rest distributed as low-interest rate loans. To fund the package, the EU will for the first time issue common debt. The recovery plan aims to support certain EU nations that have higher debt levels while preventing a potential currency crisis in the euro, and is viewed as a step towards a more integrated fiscal Eurozone.

As of July 24, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.01%
 4.51% -2.03% 4.93%
S&P 500 -0.27% 3.82% 0.62% 8.62%
Russell 2000 -0.38%
 1.86% -11.36% -5.76%
MSCI EAFE 0.41% 4.55% -7.31% -1.00%
MSCI Emerging Markets 0.56% 7.05% -3.42% 2.96%
FTSE NAREIT 0.61% -0.81% -19.37% -14.72%
Bloomberg Commodity 2.49% 4.90% -15.45% -13.11%
Barclays U.S. Aggregate 0.41% 1.19% 7.40% 9.91%

WSJ 7/21/2020, 7/22/2020; CBS News 7/20/2020; Bloomberg 7/20/2020. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.