Market movers today

Black Friday data calendar is thin. Expect low volume-trading as many Americans still enjoy a day off.

A new COVID-19 variant (so called B.1.1.529) observed in South Africa is a key focus for markets today. The WHO will hold a meeting on the variant today. While it is unclear how transmissible it is, a key concern is that it may have a mutation profile that makes vaccines less effective.

Furthermore, we continue to keep a close eye on any announcements by European governments or authorities on potential new restrictions, vaccine requirements or lockdowns as new cases keep on rising across Europe.

In Norway, we expect retail sales to weaken further as spending on services increases with the reopening of the economy (see Nordic section for more details).

In the rating space, we may get update from Moody's on Belgium and from S&P on Ireland.

The 60 second overview

New COVID-19 variant hits global risk sentiment: Global risk sentiment was hit overnight by rising fears of a new possibly highly transmittable COVID-19 variant/mutation called B.1.1.529 that has been observed in South Africa. There isn't much evidence yet, but it could have the ability to be spreading rapidly even though a huge incident spike on Nov 23 from South Africa fortunately was related to a data error. A key concern about the new variant is its mutation profile, which has the potential to make the current vaccines less effective. Data is still incoming so prevalence graphs etc. needs to be interpreted with care. The U.K. issued a temporary ban on flights from six African countries, and Australia said it wouldn't rule out tightening border rules for travelers from southern Africa if the situation escalates. The USD and Japanese Yen, both typically safehaven currencies, rose on the back of the news.

Equitiy markets in Asia fall sharply this morning: Equity markets in Asia and Europe enjoyed a relative quiet day yesterday as US was closed for Thanks Giving celebration. Most sectors were higher but defensives managed to outperform cyclicals with utilities as the best performing sector yesterday.

This morning thing are upside down as fears of the new Covid-19 variant B.1.1.529 draining all risk appetite. All markets in Asia sharply lower while US futures are down roughly 1% and European markets are down roughly 2% at time of writing.

FI: There was modest movements in global bond yields yesterday with US markets closed for Thanksgiving. 10Y German government bond yield declined a few bp, but spreads remain elevated like the 10Y BTPS-Bund spread around 130bp and the Bund ASW-spread just below 50bp.

FX: EUR/GBP started the day by moving higher but ended the day closer to 0.84 due to more positive Brexit headlines and some hawkish comments from the Bank of England governor Andrew Bailey. EUR/SEK drifted lower after yesterday's Riksbank meeting and was trading below 10.20 at the time of writing.

Credit: Sentiment in credit markets remained gloomy yesterday. iTraxx Xover widened 4.5bp and Main 1.1bp. HY bonds closed 3bp wider and IG 2bp wider.

Nordic macro

There were few surprises from the Riksbank yesterday. The monetary policy path was more or less unchanged and the Riksbank still believes that the rise in inflation is transitory. The Riksbank will buy more government bonds in 2022 than expected and more or less absorb the entire gross issuance from the Debt Office. See more in our Fast Comment Riksbank from yesterday.

In Norway, retail sales for October is released today. Retail sales have fallen sharply for the past three months but are still almost 6% above pre-Covid levels. We expect them to weaken further as spending on services increases with the reopening of the economy and increase in mobility. We reckon this effect will be particularly clear in October as the first full month after the nationwide reopening. Electricity bills were probably also much higher than in previous months, so we expect retail sales to fall 1.5% from September.

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