Newsletter: Signs of Recovery

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Bounce

Economic activity around the world is stabilizing. Surveys of purchasing managers showed service-sector and manufacturing output recovering in much of Europe and Asia this month, a welcome sign after record-low readings in March and April. The improvement offers some hope of a broad-based return to growth this summer as coronavirus-related restrictions continue to ease. Even so, the outlook is mixed. Japan’s service sector showed signs of life but manufacturing output worsened, leaving its composite purchasing managers index in contractionary territory. U.K. and French manufacturing returned to growth, but demand remains weak. Taken together, those are indications of a difficult recovery and lengthy spell before a return to prepandemic levels of economic output. —J.S.

U.S. figures are out at 9:45 a.m. ET. today.

WHAT TO WATCH TODAY

IHS Markit’s preliminary U.S. manufacturing index for June is expected to rise to 52 from 39.8 at the end of May. The services index is expected to rise to 48 from 37.5. (9:45 a.m. ET)

U.S. new-home sales for May are expected to rise to an annual pace of 640,000 from 623,000 a month earlier. (10 a.m. ET)

The Richmond Fed’s June business activity survey is out at 10 a.m. ET.

St. Louis Fed President James Bullard speaks at the Milken Institute Summer Series at 1 p.m. ET.

TOP STORIES

Home Sales Hit Bottom

Sales of previously owned homes dropped 9.7% in May from the prior month as the coronavirus pandemic kept shoppers indoors during the typically busy spring homebuying season. Sales have plunged since hitting a 13-year high in February. The May closings represent the lowest annualized sales activity since October 2010. But record-low interest rates have lured buyers off the sidelines in recent weeks, economists and brokerages say, and they expect sales to pick up starting in June, Nicole Friedman reports.

Savings Glut

One enduring effect of the pandemic is becoming clear: Consumer demand has been crushed, and savings are rising in an unprecedented manner. The accumulation of savings will undoubtedly slow sharply as purchases that were simply impossible during full lockdowns are completed. But only a fraction would have to remain to keep savings at historic highs. That now seems likely to have long-lasting effects on financial markets, depressing interest rates for years and creating a beggar-thy-neighbor effect for the international economy, Mike Bird writes.

Gold Digger

Gold prices approached a new 7½-year high. Front-month gold futures for delivery in June rose 0.6% to $1,756.70 a troy ounce on the Comex division of the New York Mercantile Exchange, closing just below their highest level since October 2012. Prices are up 16% for the year, boosted by coronavirus-related economic uncertainty, and expectations for more stimulus spending and ultralow interest rates, Amrith Ramkumar reports.

Keep Out

President Trump signed an order Monday temporarily barring new immigrants on a slate of employment-based visas, including the H-1B for high-skilled workers, from coming to the U.S. The restrictions will prevent hundreds of thousands of new immigrants who were expected to rely on the visas to work in industries ranging from tech and consulting to landscaping and seasonal jobs at resorts, Michelle Hackman reports.

More from the White House: President Trump said the U.S.-China trade deal remains in place shortly after a senior aide appeared to say the agreement was over. “The China Trade Deal is fully intact,” Mr. Trump wrote on Twitter at 10:22 p.m. on Monday. In a Monday night interview on Fox News, White House trade adviser Peter Navarro was asked about the deal, with anchor Martha MacCallum noting the president wanted to maintain the agreement and ensure that China made good on its commitments. “But given everything that’s happened and all the things you just listed, is that over?” she asked. “It’s over. Yes,” Mr. Navarro responded. As stock futures dropped, Mr. Navarro quickly sought to clarify his comments, Andrew Restuccia and Alex Leary report.

Washington isn’t the only place getting fed up with China. Top European Union officials warned China’s leaders on Monday that ties between the two trade partners would be damaged if they failed to further open their economy to European companies and treat foreign firms fairly, a clear sign of hardening attitudes toward Beijing, Laurence Norman reports.

Who Was that Masked Man?

Business executives and front-line workers are pushing government officials to require customers to wear masks, a step that could allow companies to avoid alienating a portion of the public. As coronavirus cases surge around the U.S. following reopenings in numerous states, public-health experts and many in the broader public consider the face coverings essential for slowing the spread of the new coronavirus. An equally vocal group opposes mask requirements because they think they curtail personal liberty or for other reasons, Katherine Sayre and Alison Sider report.

Underscoring continued uncertainty and concern, Louisiana Gov. John Bel Edwards said the state wouldn’t move into its third phase of reopening by the end of the week as planned due to increased infections and hospitalizations, and Texas Gov. Greg Abbott said the virus was “now spreading at an unacceptable rate.” Outside the U.S., South Korean health authorities said the Seoul metropolitan area is experiencing a second wave of coronavirus infections, and health authorities in Beijing reported 13 new locally transmitted cases.

Goodbye, Again

White House economic adviser Kevin Hassett has left the Trump administration—again. President Trump asked Mr. Hassett, the former chairman of the White House Council of Economic Advisers, to come back as an adviser in early March as the coronavirus began spreading across the U.S. Mr. Hassett agreed to come back for 90 days, which have since passed, he said Monday, his last day on the job. (His departure was first reported by Axios.) Administration officials and Senate Republicans are still grappling with the size and structure of another economic relief package, which they aim to pass by the end of next month. “The president is examining all the options and also watching the economic data come in. As the end of July approaches there should be much more clarity concerning the best design of the stimulus,” Mr. Hassett said Monday. —Kate Davidson

WHAT ELSE WE’RE READING

Why haven’t Black Lives Matter protests sparked a new wave of Covid-19? Because there were a lot more non-protestors than protestors, and they stayed home. “While it is almost certain that the protests caused a decrease in social distancing behavior among protest attendees, we demonstrate that effect of the protests on the social distancing behavior of the entire population residing in counties with large urban protests was positive,” Bentley University’s Dhaval M. Dave and fellow economists write in a new working paper.

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