Equities looked to rise coming off the Christmas break, buoyed by Donald Trump’s decision to sign the bipartisan virus relief legislation he derided as a “disgrace” just days previous.
The delay threatened more chaos, and it’s not over yet. The White House indicated it expects Congress to move forward with votes on increasing the size of stimulus checks, a tough sell in the GOP-controlled Senate. The Georgia runoffs will add pressure for Republicans. Congress will also need to decide what to do with Trump’s defense bill veto.
The dollar fell and long-end US yields rose. German equities hit a record high. The DAX pressed above its February peak, as the Brexit deal, US stimulus, and the rollout of vaccines in Europe bolstered sentiment. What you see in the visual (below) represents the swiftest rebound in history for the index.
Speaking of Germany, the country is aiming to boost vaccine production amid worries that Europe is behind in the vaccination race. “We’re working intensely on having additional production here in Germany soon,” the country’s health minister, Jens Spahn, told ZDF.
Obviously, the presence of a more transmissible strain in Europe (and elsewhere) increases the sense of urgency.
There’s concern in some countries that the populace will be reluctant to get vaccinated. In France, for example, a poll published over the weekend in Le Journal du Dimanche indicated that just 44% would get the shot.
“Let’s have trust in our researchers and doctors,” said Emmanuel Macron, who spent a week isolating after testing positive for the virus this month. “We are the nation of the Enlightenment and of [Louis] Pasteur. Reason and science should guide us,” he implored.
The first shots were administered Sunday. “Politicians on France’s far right and far left have fueled vaccine concerns,” the AP noted, but did add that “polls commissioned by the national health agency suggest that the skepticism comes from some moderate voters too.”
Generally speaking, the last week of the worst year that many living humans have ever suffered through was set up to be positive for risk. “The EU/UK trade deal agreed, sterling volatility has collapsed. The US fiscal relief bill signed, risk sentiment is in good shape,” SocGen’s Kit Juckes said. “Equities are higher, bond yields likewise (a bit) and the dollar and yen are on the back foot.”
“Stocks have been trading well post-Christmas weekend,” AxiCorp’s Stephen Innes remarked. “With traders set up from home, liquidity’s seasonality effect is not as great as in previous Christmas holidays.”
One Credit Suisse strategist summed up the mood in remarks to Bloomberg: “Next year all the building blocks are there for markets to continue this rally.”
The best-laid plans.
The people who are making the world suffer do not take a day off and work overtime.