Daily Market Color

Rates Jump Higher on Vaccine News

Rates rise as COVID-19 vaccine shows promising results
Pfizer’s morning announcement drove markets on Monday, pushing rates dramatically higher across the curve.  The curve steepened significantly –  the 2y10y spread widened to 75 bps while the 30-year yield hit its highest level since February.  Equities retraced a portion of their gains after Senate Majority Leader Mitch McConnell continued to advocate for a small stimulus bill rather than a larger package.  The S&P 500 rose 1.2% to its second-highest close in history, while the DJIA rose 2.9% to close at its highest level since February.  US crude-oil future for December delivery also rose 8.5% on hopes the successful vaccine would encourage more travel in the future.
Pfizer vaccine
On Monday morning, Pfizer announced that their vaccine has a 90% success rate in preventing COVID-19.  This is the first drug company to release data from an extensive Phase 3 trial.  Pfizer is still evaluating the safety of the vaccine for certain subgroups, like people with prexisting conditions and older people.  The company plans to submit an application for emergency use to the FDA by the end of the month and could distribute the vaccine by the end of the year.  If the company is able to stick to its timeline, up to 1.3 billion doses could be produced in 2021.
USD rises on Biden’s win
The yen suffered its biggest loss against the dollar since March after Biden’s election win pushed investors to purchase riskier assets.  Biden is expected to revisit the Phase One trade deal with China and increase overall international trade which boosted overall risk appetite in the market.  The USD also gained 0.41% against the euro after the vaccine news was announced, as markets began to forecast a faster US economic recovery. 
Derivative Path will be closed tomorrow in observance of Veteran’s Day

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