Daily Market Color November 23, 2020Rates Trade Higher on Vaccine Hopes Rates rise as third effective vaccine emerges Both equities and rates are pointing higher this morning as the market refocuses on vaccine developments. This morning, AstraZeneca, now the third pharmaceutical company with successful drug results, reported their COVID-19 vaccine is up to 90% effective in preventing infections. The announcement was cheered by risk assets, particularly after last week’s COVID-driven pullback. Equites are higher on the news while Treasury yields and swap rates are trading 1-3 bps higher across the curve. COVID-19 Update The month of November has had the highest number of virus cases since the start of the pandemic with over 3.075 million new cases. Health officials are predicting the figure to cross 4 million by the end of the month, with the final tally more than doubling October’s figure. With global cases also on the rise, the G20 issued a statement on Sunday calling for global cooperation and “affordable and equitable access” to vaccines. As of last week, Pfizer is still the only company in the US that has applied for FDA approval. Regulators will take around three weeks to review the application and issue an approval. Week ahead November’s PMI figures will be released later this morning, with economists expecting both manufacturing and service levels to remain unchanged. On Tuesday, the consumer confidence index is expected show a decline driven by rising infection rates and new state virus restrictions. Figures for GDP, durable goods orders, initial jobless claims, and international trade will all be released Wednesday morning. Durable goods orders and consumer spending are expected to rise for a sixth straight month, but economists expect the figures could begin lagging due to the pace of the recovery slowing. FOMC minutes for the November meeting will be released later Wednesday afternoon.
