Monthly Market Pulse: June 2020

It has been a very exciting couple of months at Blend Network. Over the past two months, we have achieved new milestones and sat new records, with the highlight being repaying £2,282,000 to lenders who had invested in 6 loans with Blend Network. But it is not only at Blend Network where we have seen positive news and encouraging developments. Last week, US, EU and UK flash PMIs are surprised to the upside. US unemployment declined in May when it was expected to rise. Real-time data on credit-card spending, e-commerce and consumer mobility all suggested that American consumer spending reached a trough in April and has now recovered to around 90% of its pre-pandemic level. UK retail sales also rebounded in May and were up by 12% compared with April’s record drop. In our chart of the month, we show Capital Economics’ base case scenario of a “long tick” recovery. They assume activity will recover quickly during H2 2020 and into 2021 as restrictions are eased, but also warn that increases in insolvencies and unemployment will become a constraint on growth and imply some loss in output.

Chart of the month: Capital Economics GDP lockdown and recovery scenarios (100=2016)

Source: Capital Economics

Politics

• China went into a ‘wartime mode’ to battle an outbreak of Covid-19 in Beijing, the first after eight weeks with no cases reported of local transmission.
• Most lockdown restrictions were gradually lifted in Europe enabling borders to re-open and the hospitality sector to operate again.
• In England, all shops were allowed to reopen their doors to customers again on 15 June with a plan to re-open the hospitality sector by 4 July.

Business & Economics

• UK retail sales rebounded in May and were up by 12% compared with April’s record drop, but sales were still down by 13% vs to February before the pandemic struck.
• US services and manufacturing flash PMIs hit a 4-month high in June suggesting the economic downturn losing steam. However, readings remain slightly below 50.
• In Europe economic indicators also rebounded at a faster pace than expected. Upbeat flash PMI data for the Eurozone pointed to a possible V-shaped recovery.

Real Estate

• The Nationwide House Price Index shows that UK annual house price growth dropped to 1.8% in May while the month-on-month reading saw one of the largest declines in Nationwide’s series since it started in 1991.
• Due to the lagged way the Nationwide House Price Index is constructed, the impact of pandemic in the housing data will likely continue to be seen in the June data.
• Data from HMRC showed that residential property transaction were down by 53% in April compared with the same month in 2019.

Equity Markets

• Following a sustained rally, stock markets took a pause as fears of a second wave of Covid-19 emerged in some parts of the world, including in China.
• As mentioned in the past, markets have been growing increasingly concerned of a disconnection between equity markets and the carnage unfolding on the high street.

FX & Commodities

• Gold prices have continued to rise on safe haven buying and setting new record highs. Expectations of more stimulus measures and the new Covid-19 outbreaks, including in China, supported prices.

In May and June, we funded our 2 largest-ever loans: a 10% return p.a. £1,950,000 total lending facility and a 10% return p.a. £2,225,000 total lending facility, funded by 114 investors and 110 investors respectively. We also repaid £2,282,000 to lenders who had invested in 6 loans with Blend Network. If you missed them, keep an eye on our upcoming new loans and make sure you don’t miss the chance to lend from a minimum of £1,000.

Your capital is at risk if you lend to businesses. P2P lending is not covered by the Financial Services Compensation Scheme. Investments are illiquid (the inability to sell assets quickly or without substantial loss in value). Past performance is not a reliable indicator of future results.

Blend Loan Network Limited is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN. 574048)