Equities started the week on a positive note as AstraZeneca and Oxford University announced their vaccine is up to 90% effective with two doses. Optimism did wane as the week went on over the news, but it is the most cost effective option available and it does mean there are three viable vaccines in development. Markets also cheered reports that Janet Yellen was set to be appointed Treasury Secretary, with the ex-Fed Chair seen as likely to work closely with her former employers with the potential for a more coordinated fiscal and monetary approach.
President Trump also cleared the way for a transition of government to President-elect Biden. The President continues to maintain that the election was ‘rigged’ but has lost a string of judicial challenges, and a number of recounts in key states actually increased Biden’s lead. With a formal concession looking unlikely, some level of uncertainty will remain regarding the transition process.
U.S. economic data was also mixed, with weekly jobless claims up to their highest level in five weeks and personal incomes and consumer confidence both also moving lower. On the other hand, manufacturing data and corporate profits continue to rebound to pre-pandemic levels. Eurozone data was less positive as the effects of lockdowns start to take hold. Manufacturing and Services PMIs were both lower on the month, with U.K. Services also in contraction territory.
Eurozone government bond yields were broadly flat as an initial move higher was tempered by dovish ECB comments in relation to further stimulus into 2021. There is also a growing sense that European banks will be allowed to resume dividends next year, provided they can assure regulators of their balance sheet strength. Finally, lockdowns remain in place across most of the continent, with Germany, Portugal, and the U.K. amongst those announcing further restrictions. CLICH HERE