The Market Today
AstraZeneca Touts Strong Test Results; to Seek EUA in U.S.
by Craig Dismuke, Dudley Carter
CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)
AstraZeneca’s U.S. Trial Produces Good Results: AstraZeneca said a U.S. trial showed its vaccine was more effective than expected, safe to use, and successful in preventing severe disease and death from COVID-19. The trial included more than 30,000 participants and showed the shot, which can be stored in a refrigerator instead of a freezer, was 79% effective at preventing COVID-19 and 100% effective at stopping severe cases or death from the disease. The company plans to request emergency use authorization from U.S. regulators in the weeks ahead.
24 HOURS OF MARKET ACTIVITY
Treasury Yields Move Down After Last Week’s Rise as Market Volatility in Turkey Takes Prominence in Overnight Headlines: Treasury yields have pulled back Monday after hitting new pandemic highs late last week following the Fed’s optimistically dovish policy announcement (more below). True to recent form, Nasdaq futures moved in the opposite direction and were up 0.9%, while the S&P 500 registered a smaller 0.2% gain and the Dow held near the flatline. Globally, equities were generally weaker and sovereign yields were mixed and little changed. Before the focus shifts to a busy week of U.S. economic events, a notable portion of overnight market headlines highlighted a plunging Turkish currency. The country’s president fired the head of the country’s central bank after the latter raised interest rates by 200 basis points last week in a continuation of politically unpopular tightening in recent months. At 7:35 a.m. CT, the 10-year U.S. Treasury yield was 3.5 bps lower at 1.69% after earlier dropping to as low as 1.66%.
February Snow Hits Another Report: The Chicago Fed National Activity Index for the month of February fell from 0.75 to -1.09. This brought the 3-month average down 0.48 points to +0.02. It is not surprising that the index dropped given some of the weakness seen in the February data. However, the weakness is expected to be temporary, the result of an unusually snowy month.
And Likely to Hit Existing Home Sales: Also likely to be affected by the snow, existing home sales are expected to drop 3.0% in February’s report (9:00 a.m. CT).
Week Chock-Full of Fed Communications: There is a flurry of Fedspeak this week beginning today. Fed Chair Powell is scheduled to speak at 8:00 a.m. on a BIS panel. Also speaking are Richmond’s Barkin (9:30 a.m.), San Francisco’s Daly (12:00 noon), Vice Chair Quarles (12:30 p.m.), and Governor Bowman (6:15 p.m.).
ICYMI – March 19, 2021 Weekly Market Recap: Last week’s economic reports covering February were big disappointments but broadly dismissed because of evidence the winter storms temporarily weighed on activity. More timely regional Fed surveys covering the first half of March were much stronger, adding to growing optimism that activity will pick-up as vaccinations continue to rise. That was the broad message in the biggest event of the week, with updated Fed projections on Wednesday expecting notably stronger growth this year, 6.5% compared with the 4.2% forecasted in December, that should spur a quicker recovery for the labor market, with expected year-end unemployment lowered from 5.0% to 4.5%. However, they continued to predict inflation will remain tame and allow their key policy rate to hold near zero through 2023. Yields drifted lower after the decision but moved sharply higher early Thursday as investors continued to digest the decision. The Fed sent yields climbing again on Friday after it announced it would allow temporary relief for bank supplementary leverage ratios (SLR) to expire at March 31, a year after they were implemented as part of the emergency response to the pandemic. For the week, the 10-year yield ended 9.6 bps higher at 1.72% after reaching 1.75% on Thursday, its highest level since January 2020. In response to the Fed’s persistent patience, the spread between it and the 2-year yield widened to more than 156 bps, the steepest measure since July 2015. While stocks hit records on Wednesday, they ended the week lower on the late-week rise in yields. The S&P 500 and Nasdaq both fell 0.8%. Click here to view the full recap.