Right, but when?
That’s the question the whole world wants answered when it comes to the vaccination push.
The last several weeks have delivered plenty in the way of encouraging data on COVID-19 vaccines, contributing to a powerful pro-cyclical rotation across assets, even as the US long-end refuses to join in on the reflationary euphoria (Friday saw more bull flattening, for example).
But with the pandemic still raging and worries that holiday gatherings will lead to even more infections, market participants are anxious about the timeline on widespread inoculation and herd immunity.
Last Sunday, Moncef Slaoui, head of the US government’s cartoonishly-named “Operation Warp Speed,” projected that “70% or so” of the population could be immunized “somewhere in the month of May.” (As an aside, Slaoui told Politico this week he might step down from his role as early as next month.)
In a note dated Thursday evening, Goldman attempted to “forecast monthly vaccinations for the large advanced economies,” no easy (or precise) task, to be sure.
“We use monthly global production projections from our health care equity analysts for Pfizer-BioNTech, Moderna, AstraZeneca, Novavax, and Johnson & Johnson,” the bank said, noting that “the projections assume that production gradually rises in early 2021 and achieves the announced targets.”
The bank incorporated purchase agreements and options across countries, and analyzed survey responses from Ipsos to tackle the demand side question which, for some, is the more vexing quandary. “This survey suggests that most people expect to wait some time before taking it, consistent with wanting to learn more about safety, side effects, and effectiveness,” the bank said, recapping, on the way to suggesting that demand is probably more elevated now than it was in October, due to the release of positive trial results from Pfizer and Moderna.
Ultimately, Goldman said their baseline forecast sees “large shares of the population vaccinated by the end of Q2 in all major” developed markets. The UK should vaccinate half of its population in March, Goldman remarked, and projected the 50% threshold will be reached in April for the US and Canada, and in May for the EU, Japan, and Australia.
Is there a downside case? Well, yes. Specifically, Goldman also posited a scenario where shots from AstraZeneca and Johnson & Johnson don’t succeed and public demand is less robust.
That would entail low vaccination levels in the EU (due to reliance on AstraZeneca and Johnson & Johnson) and slower inoculation in the US and Japan, as public skepticism around a shot holds back demand.
Tellingly, Canada and Australia are seen faring much better in the downside scenario due to what Goldman called “diversified supply contracts and relatively strong vaccine demand measures.” On my interpretation, that’s just a diplomatic way of saying that those two countries have highly competent governments and a saner general populace.