Key Points From This Week

Further Vaccine Successes Announced

Following last week’s announcement from Pfizer & BioNTech who reported that their COVID vaccine had shown to be over 90% effective in clinical trials, two further firms announced successful results this week. Moderns and AstraZeneca (Oxford vaccine) both confirmed that their tests had proven their vaccines to be in the 94% - 95% range in terms of effectiveness. The drugs will now be submitted for regulatory approval with hopes that the UK and US will begin rolling them out ahead of the end of the year.

US Retail Sales Miss

October US retail sales reflected a heavy loss of momentum in the economic recovery, printing just 0.3% on the month. This was below the expected 0.5% and well below the prior month’s 1.5% reading. With new infections and deaths from COVID soaring in the US over the last month , it is clearly impacting consumer activity, creating a further headwind for the Fed.

ECB Calls For Further Support

Speaking this week, ECB chief Christina Lagarde said that the resurgence of COVID was having a strong, negative impact on the eurozone economy, particularly the services sector. Lagarde said that while the vaccine news is encouraging, there is still a need to bridge the economic gap until the recovery is in full swing and called on the need for further coordination between monetary and fiscal policy.

Key Events Next Week

EZ, US & UK PMIs

The next round of PMIs are due next week and there is a high risk that these numbers come in weak given the return of lockdown restrictions in the UK and eurozone over the last month. While data sets have broadly continued to improve recently, momentum has stalled and these readings are now vulnerable to undershooting expectations, creating downside risks for investor sentiment.

FOMC Meeting Minutes

The minutes from the Nov FOMC meeting are due next week and the market will be keen to hear of the Fed’s discussions around the US elections and the resurgence of COVID with a view to gauging whether there is likely to be any further easing in the remainder of the year.

Keep An Eye On

Brexit Trade Talks

Headlines remain highly conflicting around the talks, though we are heading into crunch time now. Despite positive headlined highlighting progress within the talks, news came late this week that talks have now been suspended for a short while after the EU’s chief negotiator tested positive for COVID. Focus now is on whether the 31st December transition deadline will end up being extended if a deal is not agreed in time.

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