- 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
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.