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Market News Commentary - From The Desk of David Loesch 09.03.2020Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on September 2nd, 2020
- U.S. companies added fewer jobs than expected in August, suggesting the labor market rebound remains gradual, with employment well below pre-pandemic levels. Payrolls increased by 428,000 jobs, after an upwardly revised 212,000 in July, ADP data showed. That was less than the 1 million estimates. The Beige Book will give insight on the health of the labor market recovery ahead of Friday's payrolls report, Bloomberg Economics said.
- Credit watch: Companies from the Americas have repaid about $55 billion of the $398 billion in emergency funds obtained during the pandemic. Firms including United Air and Marriott have been paying down funds gradually about a month after borrowing. High-grade makes up 68% of the total repayments. About three borrowers are expected to tap the investment grade primary market today, desks will probably go quiet tomorrow and Friday ahead of Labor Day.
- Stimulus stalemate. The White House and Democrats still have serious differences on a relief package, Nancy Pelosi said. Steven Mnuchin called her yesterday, after saying at a House hearing that there is a need for urgent stimulus to counter the economic crisis. Pelosi said the Democrats have offered to compromise and go down to $2.2 trillion in aid. Republicans are pulling together a slimmed-down $500 billion package, aiming for a vote next week.
- With hurricane season starting, Florida is borrowing $2.25b for its catastrophe insurance fund.
- Chicago faces a 2021 budget deficit of $1.2b as the coronavirus pandemic decimates the city’s revenue with businesses shut down due to social distancing while recent unrest hurt reopening efforts.
- US state and local governments are scheduled to sell about $2.09b in municipal bonds as I write.
- For California’s $2.4b general obligation bond sale pricing Wednesday, a 10-year security with 5% coupon is seen yielding 1.13% according to pre-marketing scales.
- California lawmakers want to help small businesses that lost at least half their gross receipts at the height of the pandemic with a $1,000 tax credit for every full-time employee they hire by the end of November.
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