More progress in Europe, vaccination pace slows in the US but new infections decline further

Overall - current thinking

The picture keeps improving in EU with cases falling in most countries including Germany now. The situation is still very critical in India, but the increase in cases has at least slowed again this week (but there is uncertainty about the data quality). In the Nordics, Sweden has joined the club of improvement as still seen in Norway and Finland. Denmark has eased restrictions further and is witnessing a small increase in the positive rate. In the US, the situation continues to improve with fewer cases, hospitalisations and deaths. With ongoing mass vaccination the US should soon be able to lift restrictions further although the vaccination pace has slowed.

We continue to believe that April/early May was the overall turning point in the crisis in the Northern Hemisphere when it comes to infections and deaths. The weather is now warmer, and we have vaccinated more elderly/risk groups, which puts a limit on how high hospitalisations will go. For some EU countries, the turning point is delayed into May, as vaccinations are slower than in UK and the US. But restrictions should be lifted here during May as well.

Israel has more or less completed the vaccination process and has reopened significantly. In the UK, 51.3% have received at least the first dose while the share in the US is now 44.4%. For the US, a decline in the vaccination pace is something to monitor, as hesistancy may be higher than expected, especially after the J&J pause. The vaccination pace in the EU is increasing and is now at 26.3%. EU still targets 70% of the adult population being vaccinated by mid-July.

For now, we stick to our base case that restrictions are eased gradually in spring and that they are not re-imposed in the autumn.

Analysis so far have found that vaccines are effective also against new variants, especially with respect to severe cases, which in our view is the most important feature of vaccines. In addition, most vaccine producers have started to update vaccines targeting new variants, just in case, and Moderna have published very good results showing that its candidates are working. This means that the probability is low that the vaccines turn out to be ineffective and we will experience another "lost year" from an economic perspective is low. We think it is too early to cry wolf about the new Indian variant B.1.617and await further studies on vaccine efficacy against this variant. That said, nothing suggests that the vaccines are ineffective against B.1.617.

We cannot rule out this becomes an "endemic", i.e. we need to revaccinate in particular risk groups and health care workers every year to provide protection. That scenario, however, is not as bad as ineffective vaccines and should be manageable.