The Market Today
Pfizer-BioNTech Vaccine (Comirnaty) Becomes First to Receive Full FDA Approval
by Craig Dismuke, Dudley Carter
Pfizer-BioNTech Vaccine Becomes First to Receive Full FDA Approval: The FDA granted the Pfizer and BioNTech joint vaccine full approval for use in those 16 years and older. The shot, to be marketed as Comirnaty, was granted emergency use authorization late in 2020 and continues to be available to those 12 through 15 years old under emergency authorization. The Pfizer-BioNTech shot accounts for 204.8 million doses, or 56.5%, of the total 362.7 million vaccine doses that were administered in the U.S. from December 2020 through August 22, 2021. Moderna’s vaccine, which is also expected to receive full approval in the weeks ahead, has accounted for 143.3 million of the total, or 39.6%. The Company and others, including the White House, hope full approval will spur additional vaccinations. President Biden said after the FDA’s announcement, “If you’re one of the millions of Americans who said that they will not get the shot until it has full and final approval of the FDA, …The moment you’ve been waiting for is here. It’s time for you to go get your vaccination.” He went on to add, “I’m calling on more companies in the private sector to step up the vaccine requirements that will reach millions.”
TODAY’S ECONOMIC CALENDAR
Richmond Fed Manufacturing and New Home Sales: Tuesday’s two economic reports will be released together at 9 a.m. CT. The Richmond Fed’s Manufacturing index is expected to edge down from 27 in July to 24 in August, directionally consistent with previously released regional Fed data. However, an as-expected result would represent the first drop since January and keep the index at an historically elevated level. Yesterday, data from Markit, which gauges activity at the national level, signaled a slower pace of activity for manufacturing and services in the first weeks of August (more below).
Also at 9 a.m., Census Bureau data is expected to show new home sales finally picked up in July after plunging 22.5% from March to June. An as-expected 3.1% gain would lift the sales pace to 697k annualized units, 30% below January’s 993k pace which had marked the fastest rate of sales in 20 years.
YESTERDAY’S ECONOMIC NEWS
Markit PMIs Move Down More than Expected in Preliminary Look at August: Economic activity in the U.S. decelerated more sharply than expected in August based on preliminary Markit PMIs as spread of the Delta variant exacerbated headwinds from supply-chain issues and dislocations in the labor market. The Composite PMI fell from 59.9 to 55.4, a fourteenth month of expansion but the weakest level since December. Much of the weakness resulted from a decline in the Services PMI from 59.9 to 55.2, although manufacturing also dipped from 63.4 to 61.2. Employment softened across both sectors as businesses continued to struggle to find workers. Prices paid and received remained notably elevated and supplier delivery times lengthened to a new record for manufacturing companies, a concerning signal that supply-chain issues are persisting. While rising new infections in the U.S. were blamed for weaker activity in services industries, demand for goods remained robust and businesses across industries remained optimistic about the 12-month outlook, a small silver lining in a broadly softer report.
Existing Home Sales Recovered Unexpectedly and for a Second Month in July from Sharp Early-Year Drop: Existing home sales rose 2.0% unexpectedly in July and June’s gain was notched up from 1.3% to 1.6% in revisions, lifting seasonally adjusted annualized sales to 5.99 million units. July’s pace beat expectations for 5.83 million units but also remained 10% below January’s 6.66-million-unit level. Sales declined by more than 13% from January to May as low inventories and rising prices shifted the narrative for housing following strong activity in the second half of 2020. Available inventories did rise and annual price gains moderated, although both remained stretched historically. The number of months of sales currently sitting in inventory rose from 2.5 to 2.6, still the lowest July level on record. Annual price gains decelerated for a second month from May’s record-fast 23.6% increase to a still-brisk 17.8%.
Treasury Yields Stagnate Despite Stocks’ Climb Back Toward Record Territory: U.S. equities rose strongly to start the week, following in the footsteps of indexes across Asia and Europe which has posted solid gains earlier and extending a recovery that began last Friday. Energy companies were top performers within the S&P 500 as crude prices rallied amid the broad risk-on moves. Oil prices bounced back more than 5% after sliding nearly 9% last week and weakening for seven consecutive sessions. U.S. WTI closed back up near $65.50 a barrel. Tech stocks also rebounded Monday in both the U.S. and abroad and were tailed by positive performances in other cyclically sensitive industries. The S&P 500 rose 0.9%, splitting a smaller 0.6% gain for the Dow and a larger 1.6% rally that pushed the Nasdaq to a new all-time high. While the risk-on rebound for equities was clear, the Treasury market lacked a similar enthusiasm. Despite moves higher in most global sovereign yields, the Treasury curve ended the day little changed. The 2-year yield closed flat, the 5-year yield dipped 1.3 bps to 0.77%, and the 10-year yield dropped 0.3 bps to 1.25%.
Asian markets posted another strong day of gains on Tuesday as tech shares in China and Hong Kong extended their recovery. Market sentiment has since moderated, however, evidenced by a 0.2% decline for Europe’s Stoxx 600 and a pullback in U.S. futures. Contracts on the S&P 500 were up 0.1% at 7 a.m. CT, near the lows of the day; even a marginally positive open would push the index into record territory. Energy companies remained a bright spot in major global indexes as oil prices added to yesterday’s jump which had unwound a significant portion of last week’s sharp declines. Treasury yields were higher and steepening at 7:30 a.m. CT, with the 2-year yield adding 0.2 bps to 0.23% and the 10-year yield up 1.7 bps to 1.27%. The first of three weekly Treasury note auctions, an offering of $60 billion in 2-year securities, will take place at noon CT.