Editor's note: COVID-19: Economic Analysis is a series of articles comprising experts' views on developing micro and macroeconomic situations around the globe amid the COVID-19 pandemic. This article's author Jimmy Zhu is chief strategist at Singapore-based Fullerton Research.

The U.S. stocks recently showed much less enthusiasm on some of the better-than-expected key economic data, after traders may have realized that the current prices are too complacent on a "V-shape" economic recovery, and policymakers would have much less stimulus tools to support the economy if the second wave of virus infection is to arrive in third quarter.

The U.S. jobs report released last week showed that the country added 4.8 million jobs in June, after the number increased by 2.7 million in May. Based on weekly jobless claims since March, the largest economy may have lost 20 million jobs in this period. Having that said, around 63 percent of the population has lost their jobs and haven't returned to work at this moment.

There is other indicator that shows the pace of U.S. companies hiring remains at a slow pace. For example, even as ISM manufacturing PMI surprisingly rose to above-50 level last month, its business employment sub-index was still well below 50 at 42.1, suggesting many U.S. companies remain cautious on re-expanding the manpower when no one knows whether the second wave of the virus spreading is going to hit the business harder in near future.    

Fed Powell's testimony to Congress on the economic outlook in June also expressed his concerns on the recovery in labor market. He predicted that there will be millions of people who don't get to go back to their old job, there may not be a job in that industry for them for some time.

With a large amount of yet-to-be-employed people in the U.S., it definitely hurts the consumption in the near term, which accounts for about 70 percent of the country's GDP. In May, U.S. retail sales surged by 17.7 percent following a 14.7-percent decline in prior months, which implies a 41.6-percent contraction in annualized rate.

As infections surged again in the last two weeks of June, some states' reopening activities had to be stalled with restriction measures to curb the spread of the virus being reapplied. Thus, the recovery in consumption quickly faded last month.   

When the consumers are holding their spending, it reflects the U.S. stock market is currently too complacent on the pace of recovery. The correlation between the University of Michigan consumer sentiment index and S&P 500 stood at 0.8 over the past 20 years. When the current level of S&P 500 is only down by around three percent since the beginning of the year, the consumer sentiment index is still near the lowest levels since 2013.

After all, the Fed's balance sheet-aggressive expansion in second quarter is still one of the major supports to the stock prices, and it has started buying some corporate bonds as well.  So, when the stock market is diverging from the current economic condition, it's not necessary that the stock prices will start to retrace soon. However, signs that stock market starting to lose the upward momentum are emerging.

U.S. stock market were not excited after the release of upbeat jobs report last Thursday. S&P 500 rose as much as 1.60 percent on that day, but it quickly pared most of the gains shortly and only closed 0.45 percent higher. Not only the surging infection cases that weighed on traders' sentiment, market is still assessing whether the current stock prices are rising much faster than the moderate economic recovery.

The market logic is straightforward sometimes - if increasing good news are being ignored by the investors, who would probably start paying more attention to those negative events. In other words, market's reaction to various events will become asymmetric, such as better-than-expected economic data failing to boost the equity prices, while some uncertainties and some other negative events' impact may easily trigger the rising fears in the capital market.

Warning from bond traders

Bond traders, who have always been correct to predict the upcoming recession and Fed's rate paths in past, their outlook on the U.S. economic recovery is more pessimistic, sending an important message to the stock trader "don't be overly complacent."

Even with the Citi U.S. economic surprise index surging to the highest level in history, a gauge to show the gap between economists' forecast and actual data, U.S. bond yield remains near the historical low levels. The 10-year yield now stands at 0.669 percent, only 12 bps above the lowest level in March.

The bond market reflects the traders' long-term growth and inflation outlook, which means the current bond market doesn't believe the economy is heading towards a smooth recovery at this moment. On one hand, the Fed has limited tools left after it aggressively cut the rates and expanded its balance sheet in past months; on the other hand, rising virus cases may force some places to impose lockdowns again.

Florida reported 200,111 COVID-19 cases on Sunday, recording an average increase of 5.3 percent in the past seven days. In Europe, a lockdown has been ordered for a region of Galicia in northwestern Spain, restricting travel in and out of A Marina for about 70,000 residents.