The highlights of last week’s economic news were reports on trade, service sector confidence, and the jobs market. This week will be another busy one for updates, with releases scheduled on inflation, retail sales, industrial production, and consumer sentiment.

Today, I'd like to take a look back over the past month to evaluate how far we’ve come in the coronavirus crisis. We’ve seen real progress in terms of the pandemic, with daily spread rates going from 15 percent at the start of April to less than 3 percent in recent days. Plus, the daily testing rate has doubled in that same time period, with the number of positive test results declining. We’re also making progress on the economic front. The news here isn’t necessarily good, but we could say it’s getting less bad. Weekly layoffs have started to trend down, federal stimulus programs have gone into effect, and a number of states have begun to reopen. The markets have taken note of these shifts and fully expect a V-shaped recovery.

The two keywords for last week’s update were “continued progress,” and those would work for this week as well. As this is the first update for May, however, let’s take a look at the progress over the past month, since the start of April. While weekly data is useful, the pandemic has now continued on for long enough that we have the data to establish a broader context—and that broader context is surprisingly positive.

It was the best of times, it was the worst of times. April was a Dickens of a month. But what lies ahead? Let’s take a closer look.

Last week saw the release of several important economic updates, with the initial look at economic growth in the first quarter drawing much of the attention. The pace of reports this week will be slower, but the release of April’s employment report on Friday will be closely monitored.

In April, U.S. markets were up by double digits. Still, the economic damage continued. Millions of jobs were lost, and businesses shut down. But we did see progress. The spread of the virus slowed, and testing increased. Plus, federal stimulus provided funds to individuals and businesses. The markets noted these improvements, bouncing back in April. In fact, the markets expect a full recovery in about a year. Are they right?

Today, I'd like to discuss where we are in the coronavirus crisis, including a look at the virus itself, the economy, and the market.

As we did last week, I’d like to provide an update on where we are in the coronavirus crisis. This week, the news has generally been good. The virus continues to come under control, with the growth rate slowing (although the case count has not declined as much). Some states are reopening their economies, which will give us valuable data and should help with employment. Finally, the markets have continued to rally but may have gotten a bit ahead of themselves. Let’s take a closer look.

With the Fed’s regular meeting concluding today, expectations are that the central bank will continue to provide whatever stimulus is necessary to keep the economy afloat. In conjunction with the federal government’s unprecedented multi-trillion dollar stimulus program, fears are rising that inflation is coming both fast and hard—and that we, as investors, need to plan now for this inevitability. I don’t believe it.

Brad here. Today, Nick Follett, manager of fixed income on our Investment Management and Research team, is here to discuss what's happening with bonds and the fixed income market. Over to you, Nick!

About one month ago, the bond market broke. Equities were down, as was fixed income—at exactly the time when you would expect and need it to be up. The 10-year U.S. Treasury, which started the year at 1.90 percent, fell from 1.10 percent (on March 2) to 54 basis points (bps) just one week later. There were concerns about every aspect of the financial system, from money market funds to the system itself. Indiscriminate selling forced down all fixed income classes as even the most liquid Treasuries, municipal bonds, and investment-grade corporates saw few if any buyers for the inordinate number of sellers.