The Market Today

Vaccines En Route; New Stimulus Effort; Brexit Talks Continue


by Craig Dismuke, Dudley Carter

TODAY’S CALENDAR

There are no economic reports on the calendar this morning. The electoral college will officially meet today to elect Joe Biden as president. Congress does not officially count the electoral college votes and declare a winner until January 6.  Inauguration day is January 20.  As discussed below, the first deliveries of Pfizer/BioNTech’s vaccines will occur this morning.  Lawmakers are expected to make a new run at COVID-19 relief with a new stimulus bill today (details below). And Brexit talks continue today, past yesterday’s fifth hard deadline that was missed.

CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)


OVERNIGHT TRADING

Market Sentiment Strengthens as Vaccines Ship and Stimulus Talks Progress: As expected, several of the focus areas from last week remained in the headlines over the weekend and are contributing to a positive start to the week for global risk assets. The Pfizer-BioNTech vaccine was officially approved by the FDA late Friday and doses of the shot have begun to be shipped across the U.S. Congress continued to negotiate on a broader omnibus bill and more targeted stimulus package, with lawmakers expected to officially bring forward a stimulus plan later today. According to reports, the original $908 billion bill proposed by a bipartisan group of lawmakers will be split into two separate bills in hopes to break the gridlock that has plagued the talks for weeks. A $748 billion bill will include topics that both parties support, such as unemployment assistance and small business aid, while a second $160 billion bill will cover the “poison pills” of business liability protections and state and local aid.

Brexit Deal Still Possible: Outside of the U.S., Brexit has added to the angst of the pandemic in recent weeks but the continuation of talks on Monday further supported the upbeat market tone. Leaders from both the EU and U.K. drew a line in the sand last week, saying a decision should be made by Sunday on whether a deal was possible. No trade deal was reached, but talks have continued which implies some progress and the EU’s top negotiator reportedly told other government officials that, while a couple of key differences remain, a deal is still possible. Amid the vaccine, stimulus, and Brexit developments, Asian equities inched up 0.2%, Europe’s Stoxx 600 was 1.0% higher, and U.S. futures were stronger by around 0.8%. The British pound has risen sharply and U.K. yields are out in front of a global uptick. The U.K.’s 10-year yield had added 7.9 bps to 0.25% just after 7 a.m. CT while the 10-year U.S. Treasury was 3.8 bps higher to 0.94%.


NOTEWORTHY NEWS

ICYMI – December 11, 2020 Weekly Market Recap: Stocks fell last week and Treasury yields declined as investors became concerned about a no-deal Brexit and frustrated by Congress’s inability to compromise on a plan to inject additional aid into a slowing U.S. recovery. It was an active week for headlines out of Europe with the U.K. becoming the first country to approve the Pfizer-BioNTech vaccine for use and the ECB and European governments acting to provide more accommodation to European economies. Among other “recalibrations,” the ECB expanded its emergency asset purchases by 500 billion euros and extended the program by nine months through March 2022. Separately, European governments struck an historic agreement to issue joint debt to fund a $2.2 trillion long-term budget that includes $909 billion in immediate emergency aid. And yet, tensions remained high as European and U.K. negotiators failed to reach a trade agreement with the clock winding down on the Brexit transition period. Anxieties were also elevated in the U.S. as stimulus talks in Congress remained gridlocked just weeks before key consumer protections lapse at the end of year. The weekly jobless claims data showed new filings for unemployment jumped sharply to their highest level since September. Late Friday, a House-approved, one-week stopgap spending bill cleared the Senate and was sent to the President to avoid a government shutdown. Despite the positive news that an FDA advisory panel approved the Pfizer-BioNTech vaccine to move forward in the emergency use approval process, the S&P 500 declined 1.0% for the week and the 10-year Treasury yield ended 7.0 bps lower. Click here to view the full recap.


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