The Market Today

Vaccine Analysis Shows 90% Effectiveness, Supercharges Market Moves


by Craig Dismuke, Dudley Carter

CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)

Monitoring the Virus Headlines – Positive Pfizer, BioNTech Vaccine Report: Record numbers of new COVID-19 cases are being reported globally and in the U.S.  Along with the recent jump in cases has come some faster-moving economic data showing signs of a renewed pullback in mobility.  While the U.S. has yet to implement a nationwide lockdown similar to the widespread restrictions seen across Europe, the impact of people self-quarantining is evident.  However, just before 6 a.m. CT. this morning, it was announced that an interim analysis of Pfizer and Germany’s BioNTech’s phase 3 trial results which reportedly included tens of thousands of volunteers, shows their jointly created vaccine resulted in no major safety issues and prevented more than 90% of infections, a much higher efficacy rate than was expected. Results could be finalized this month and allow the company to apply for regulators to approve the shot.

 

TODAY’S CALENDAR

Quiet Start to Quiet (Hopefully) Week: Cleveland Fed bank President Mester and Dallas Bank President Kaplan are scheduled to speak today.  Apart from those speeches, there are no economic events to note. 


OVERNIGHT TRADING

Vaccine Report Sparks Risk-On Surge: Global equities are sharply higher Monday and longer Treasury yields have spiked higher on renewed hopes that an effective and safe vaccine will be available soon and help bring an end to the global coronavirus pandemic. After falling Friday, stocks had already resumed a strong climb from earlier in the week to send Asian indices up more than 1% by the close. However, that upbeat sentiment was supercharged just before 6 a.m. CT by the announcement from Pfizer and BioNTech.

10-Year Treasury Yield Spikes to Highest Level Since March: Europe’s Stoxx 600, already up 1.3% on the day, tripled its gain to 3.9%. Futures on the S&P 500, which were 1.4% higher before the news hit the wires, were 3.7% stronger heading into U.S. trading. The optimism lifted shares in some companies that have been the hardest hit during the pandemic. Carnival Corporation’s shares surged nearly 30% and Delta Airlines’ stock rose more than 17%. Global sovereign yields also shot higher, sending 10-year yields in major European countries up by between 4 bps and 7.5 bps. The 10-year U.S. Treasury yield soared from marginally lower on the day to up more than 10 bps at 7 a.m. CT to 0.91%, its highest levels since March 19. The news shifted focus, at least temporarily, from the pending election results in the U.S. Former Vice President Biden gave an acceptance speech on Saturday night after media outlets called the election in his favor while President Trump said his team plans to challenge the results in court. Senate control remains uncertain with two races in Georgia set for a run-off in January that could determine which party has a majority.


NOTEWORTHY NEWS

ICYMI – November 6, 2020 Weekly Market Recap: Markets were volatile last week in what turned out to be one of the busiest weeks for headlines in recent memory. The 2020 elections were obviously front and center, reawakening a Treasury market that had largely been suppressed by historic amounts of monetary accommodation since the start of the pandemic. With most polls predicting a relatively easy victory for former Vice President Biden and a measurable chance for Democrats to take the Senate back from Republicans, markets reacted strongly to early indications on election night that the presidential race would be tighter than expected and that Republicans could well hold the Senate. A divided Congress would reduce the likelihood of a stimulus package as large as Democrats would prefer, thereby decreasing the need for a massive issuance of new Treasury debt. With fewer concerns about increased supply, the 10-year yield tumbled from 0.94% Tuesday evening to 0.77% by Wednesday’s close. The Fed meeting was uneventful with little market impact but a stronger-than-expected jobs report sent yields climbing again Friday, paring the 10-year yield’s weekly drop to 5.5 bps to 0.82%. Largely ignored by the markets, there was a host of other important economic reports, the Bank of England increased the size of its asset purchase program after England was placed back under a lockdown, and cases in the U.S. set a new daily record of more than 126k on Thursday and Friday. Click here to view the full recap.


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