Initial jobless claims, tech earnings, and virus spikes. Data check Economists surveyed by Bloomberg expect today's weekly initial jobless claims to be around 1.4 million, in line with last week's total which was the first rise in since March. Continuing claims will likely remain over 16 million. The data is published at 8:30 a.m. Eastern Time along with the first look at second-quarter GDP, which is forecast to plunge an annualized 34.5%, the most on record going back to the 1940s. Already this morning Germany reported a record 10.1% slump in the quarter. Tech earningsAfter their leaders spent spending yesterday defending themselves in front of lawmakers in Congress, Alphabet Inc., Apple Inc. Facebook Inc. and Amazon.com Inc. will face investors today as the biggest companies in tech report earnings after the bell. Amazon is expected to get a massive boost in revenue from the pandemic, while Apple will give an update on its newest services such as TV+. Alphabet and Facebook will likely fare less well as spending on digital advertising slowed in the quarter. It's also a big day for oil earnings with both Royal Dutch Shell Plc and Total SE surprising the market by reporting profits in a quarter which saw crude prices turn negative. Record deathsFatalities from Covid-19 passed 150,000 in the U.S. as Texas, Florida and California reported record daily deaths. Germany is seeing a new spike in cases and Tokyo saw a record number of infections. Health officials bracing for a new onslaught of cases when summer is over are alarmed by what Australia is experiencing as winter sets in. The health and economic damage from the crisis in the U.S. could lead to a stop-gap bill from Congress to extend federal unemployment insurance and protections against evictions as Democrats and Republicans remain far apart on a full stimulus package. Markets dropContinuing worries about coronavirus and some disappointing earnings are helping push global stock indexes lower this morning. Overnight the MSCI Asia Pacific Index slipped 0.2% while Japan's Topix index closed 0.6% lower on reports of possible new restrictions. In Europe, the Stoxx 600 Index was down 1.2% at 5:50 a.m. on the busiest day for earnings so far this year. S&P 500 futures pointed to a drop at the open ahead of jobless and GDP data, the 10-year Treasury yield was at 0.558% and gold fell. Coming up...As well as the 8:30 a.m. data drop, U.S. Consumer Comfort is at 9:45 a.m. Stimulus talks continue in Washington, with House members now required to wear masks in the chamber. NASA is due to launch a rover to Mars. As well as big tech, Ford Motor Corp., Gilead Sciences Inc., Eli Lilly & Co., Procter and Gamble Co., DuPont de Nemours Inc., Newmont Corp. and Kraft Heinz Co. are all among the many, many companies reporting results today. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Joe's interested in this morningFed Chairman Jerome Powell didn't make a ton of new news yesterday. There were no programs unveiled. No changes to asset purchase plans. No changes to rate policy or updates on forward guidance or Yield Curve Control or anything like that. I noticed while watching his press conference that nothing he said was worthy of a red headline on the Bloomberg Terminal. And yet markets surged anyway.
The takeaway is that the Fed is going to be on hold for an extremely long period of time, regardless of what happens in the real economy. And everyone understands that the Fed is committed to this. Back at his last press conference in early June, Powell made the key statement: "We're not even thinking about thinking about raising rates." That's the stance of monetary policy right now, and you can see it in the market.
This chart shows breakeven inflation rates (yellow) vs. the yield on the normal 10-year Treasury. You can see that in 2009, coming out of the wake of the crisis, the yield on Treasuries marched higher, as traders expected the Fed to do its normal thing of raising rates over time to fight off any incipient inflation. Now if you look at the current period, we've had a similarly sharp rebound in breakeven rates, but no increase in nominal yields. This is what not even thinking about thinking about raising rates looks like in practice.  At some point we may get a more explicit framework whereby the Fed adopts some kind of state-based forward guidance. (There's a great piece from Skanda Amarnath and Sudiksha Joshi about what that could look like in practice here). Or we might get some kind of Yield Curve Control. But at this point, it's already well understood. From a rates perspective, the Fed might as well go on vacation and check back in a few years. That's because until the economy genuinely starts to resemble the pre-crisis economy, in terms of employment and wages and prices, they're not going to be doing anything. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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