More positive vaccine news

Market movers today

We will keep monitoring news on vaccine efficacy and production capacity. Lots of studies are released these days.

Today is another very quiet day on the data front. Chinese CPI is released overnight. Consensus looks for a drop to 0.0% in January from 0.2% in December. The low inflation rate is due to a combination of low food price inflation as well as subdued core inflation.

The 60 second overview

Vaccine news continues to be mostly positive. Although it is a bit uncertain exactly how effective the AstraZeneca vaccine is against the South Africa strain, vaccine news continues to be mostly positive. Yesterday, a new study by Shi et al (2021) showed that the Pfizer vaccine is still highly effective against mutations including the South African one. Another study by Kishony et al (2021) showed that viral load among people who contracted COVID-19 despite being vaccinated is lower than among people who have not been vaccinated. This suggests that they are less sick and also most likely that they are less likely to spread the virus to others. EU has finalised a second deal with Pfizer buying an additional 300 million doses, see Reuters. USA Today writes that Pfizer expects to cut production time by nearly 50% so that it takes an average of 60 days to produce a batch of COVID-19 vaccine from 110 days today.

South Africa's plans to start offering healthcare workers the AstraZeneca vaccine were crushed with the study yesterday mentioned above. South Africa, the worst COVID hit African country, has now replaced the AstraZeneca vaccine with the one from Johnson and Johnson in its vaccine programme, a vaccine that can be stored in a refrigerator like the AstraZeneca vaccine, which is crucial in African countries. However, the Johnson and Johnson vaccine has not yet been authorised by the South African regulator.

Monetary policy: ECB president Lagarde tried to push for a finalisation of the 750 billion euro EU support package yesterday, when she spoke to the European parliament. She also confirmed that the ECB will maintain its ultra-easy monetary policy as "underlying price pressures are likely to remain subdued" despite the January inflation spike.

Equities continued the move higher yesterday driven by value, small caps and cyclicals. Energy stocks took the lead rising 2.5% while Utilities was the only sector in red falling 0.6%.

In the US all major indices are at new records, Dow +0.8%, S&P 500 +0.8%, Nasdaq +1.0%, Russell 2000 +2.5%.

This morning Asian market are mostly higher while European and US futures are flat.

FI: European rates ended broadly unchanged on the day, except Italy where Draghi has started talks on forming a government, which continues to provide constructive sentiment for the BTPs. BTPs-Bund spread tightened 2.8bp to stand at 95bp. 30y US treasury yields briefly touched 2%, before correcting lower to 1.96% on the close. Yesterday's ECB PEPP data showed that net purchases amounted to EUR13.5 last week, which compares to EUR12.8bn the previous week.

FX: On a day characterized by green equities, value outperformance and higher commodities it was no surprise to see NOK, RUB and AUD once again leading gains in yesterday's session. EUR/USD, EUR/GBP and EUR/SEK were all little changed.

Credit: Following a long stretch of very strong performance credit markets took a slight breather yesterday where iTraxx Xover widened to 245bp (+2bp) and Main was unchanged at 47bp. Cash bonds too only saw small moves with HY marginally tighter and IG unchanged.

Nordic macro and markets

No Nordic market movers today.