Key events in developed markets

The US economy has bounced strongly in the wake of the economic reopening and that story should be reinforced by a move into positive territory for the ISM non-manufacturing index. However, the rising number of Covid-19 cases is threatening the story, particularly in southern and western states that opted for an early, aggressive reopening schedule. This is starting to put a strain on hospitals. In response, some state governors are reinstating containment restrictions while other states that are further behind in the reopening process are becoming more hesitant to push on with their phased programmes. If renewed containment measures make it unviable for businesses to operate then it will only add to the problems in the jobs market, which is why we should continue to closely follow the jobless claims numbers published each Thursday.

Brexit talks have always been a bit of a rollercoaster, and the latest developments are no different. Two weeks on from the UK and EU’s commitment to ‘intensify’ talks, the latest round of talks have ended a day early. It’s unlikely that discussions in London next week will yield any more success, although we (like many commentators) still feel a deal is ultimately possible. It is admittedly unlikely we’ll see any major breakthroughs until much closer to the October unofficial deadline, and in the end it’ll boil down to whether the UK is willing to accept some alignment to EU state aid rules. The jury is still out on that one, but either way, we’d reiterate that the economic differences between a free-trade agreement and ‘no trade deal’ are limited – at least compared from the current starting point of full alignment.