Market movers today
- News on the vaccine front continues to be an important market driver.
- The US COVID-19 development continues to be in focus as new infections and hospitalisation climbed further over the weekend. Thanksgiving implies a further hurdle to bring the virus under control.
- On the data front November Flash PMI for the euro area and the US may start to show the first signs of a weaker momentum – especially in the service sector.
- According to the Telegraph, Britain’s Prime Minister Boris Johnson is set to speak to European Commission President Ursula von der Leyen as we head for crunch time to reach a Brexit deal.
- Riksbank meeting, the German Ifo, FOMC minutes and ECB minutes are also due this week.
The 60 second overview
Vaccine and treatment news. We got some vaccine news over the weekend. We now know that the US FDA’s advisory will meet on 10 December and that the FDA will decide afterwards whether to grant Pfizer an Emergency Use Authorisation for its vaccine candidate, see press release. The process may be faster in the UK, where The Telegraph wrote yesterday that the approval for using Pfizer’s vaccine may arrive in less than a week, according to government sources. In Spain, PM Pedro Sanchez said the vaccination process is likely to begin in January (and expects a ‘very substantial part of the population will be able to be vaccinated, with all guarantees, in the first half of the year’). On treatment, the US FDA has issued an Emergency Use Authorisation for Regeneron’s antibody treatment for mild to moderate cases on Saturday. While the near-term situation and economic outlook for countries in the northern hemisphere still look fragile, the continued good news on vaccines and treatments suggest we can put the worst of the COVID-19 crisis behind us next year.
Equities. Friday’s markets closed mixed, following a fairly dull session (S&P 500 down -0.7%, Nasdaq -0.4%, Dow -0.8%, but Russel 2000 up 0.1%). Defensives outperformed Cyclicals but without a clear distinction between Value and Growth. Among sectors, Utilities, Materials and Healthcare held up best, while Tech and Industrials trailed. On the same line, yields moved a couple of basis points lower, dollar firmer and gold higher.
FI. 10Y German government bond yields have again been edging closer to -60bp as infections rise and more lockdowns are looming. The positive news regarding a vaccine only had a short-term effect on the bond market. Today, a string of PMIs from the Eurozone is released and are expected to decline, which could add to the downward pressure on yields despite the recent news that several vaccines will get an emergency approval already this year.
FX. Today will be all about PMIs for EUR/USD. During the week, we expect EUR/NOK to continue to trade within its recent range. For the SEK, the Riksbank decision on Thursday is the domestic data point to watch.
Credit. Despite intra-day volatility, credit markets finished Friday more or less unchanged, with iTraxx Xover 1bp tighter to 282bp and Main 1bp wider to 52bp.
