Positive returns on risky assets in July – but weaker USD


The coronavirus continues to influence the reopening process and consequently economic growth. Hard-lockdown countries have generally been able to reopen without seeing a significant acceleration in corona cases. By contrast, countries with soft lockdowns and early reopening tend to see a renewed acceleration in corona cases.

For example, the U.S. reopening backfired due to the increasing number of cases from mid-June. In the past few weeks the U.S. has introduced new restrictions in the states hardest hit, primarily affecting activities involving large gatherings, including restaurants/entertainment. High-frequency data from the U.S. now suggest minor activity declines in restaurants/retail trade and stable industrial production in July. This past month, the reopening in other leading economies has been somewhat smoother compared with the U.S. As expected, we will see new coronavirus outbreaks in Asia and Europe, primarily in the form of cluster outbreaks, which countries are trying to contain through different interventions.

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