DXY rebounded last night:
Australian dollar pumped and dumped vs US and went parabolic elsewhere:
EM to the moon:
Brent ecstasy!
Gold OMG!
Metals firmed:
Miners to the moon!
EM stocks to the moon!
Junk to the moon!
Yields to the moon!
Stocks to the moon!
Westpac has the wrap:
Event Wrap
A vaccine developed by Pfizer and BioNTech was found to prevent more than 90% of symptomatic Covid-19 infections in a trial of tens of thousands of volunteers, the most encouraging scientific advance so far. While the results are preliminary, they may pave the way for the companies to seek an emergency-use authorisation if further research shows the vaccine is safe.
Event Outlook
Australia: The October NAB business survey will capture reactions to the Budget and the economy’s continued reopening.
New Zealand: Westpac expects October card spending rose 3.0%, with weekly spending gauges pointing to firm durables demand.
Japan: The September current account surplus is expected to stabilise around JPY2025.1bn after widening in August.
China: The market anticipates that the PPI will continue to contract in October (market f/c: -1.9%yr). Meanwhile, the October CPI should moderate in the face of decelerating food price growth and sluggish underlying inflation (market f/c: 0.8%yr).
Euro Area: The widespread return to lockdown will cast a shadow over the November ZEW survey of expectations.
UK: The ILO unemployment rate is forecast to reach 4.8% in September. Ahead, the extension of the wage subsidy will provide crucial support.
US: The October NFIB small business optimism index is set to remain broadly stable at 104.4. However, the election outcome and resultant tax implications may pose a risk going forward. Following this, September job openings from the JOLTS report are expected to remain around 6500k, but labour market conditions vary substantially between sectors. Finally, the FOMC’s Quarles, Rosengren and Kaplan will speak.
Vaccine ecstasy is here. Just as well:
The US recovery is falling away even as markets price the vaccine boom:
So, after one day of buying deflation assets with both hands on lack of stimulus, the market has whipsawed back to inflation assets on the coming vaccine wave as tech cops it, the value rotation kicks off and bonds back-up.
The Pfizer results are impressive if limited. We don’t know how long it will last. It is two-shot which will diminish its take-up, needs to be stored at -70C meaning rollout is bit more difficult, so it’s not the cure-all. But, obviously enough, as the first of many it is encouraging.
The Australian dollar pumped and dumped on the result. A post-virus recovery is bullish for the currency for a while. But, as said yesterday, not long. As global growth rebounds to something near normal then, Australia’s particular problems relative to global recovery will come the fore:
- falling iron ore;
- China decoupling;
- crushed immigration;
- weak profits,
- and Depressionberg Unstimulus…
leading to a falling AUD as Australia lags the global recovery.
