The US saw its deadliest day ever for the virus, and political gridlock continued in respect to a stimulus package. Many US households will see their unemployment benefits removed at the end of this year, and the additional 853,000 jobless claims last week serves as a timely reminder for the need for a policy response. Negotiations on a $908bn deal continue.
Last Thursday the ECB boosted its bond purchasing programme by $500bn and also extended it into 2022. The move naturally boosted bonds, but some of the negative commentary, combined with stubbornly high case numbers, led eurozone stocks lower for the week. The weakening US Dollar versus the Euro also reduced returns for Irish investors in US equities.
Brexit talks are continuing as negotiators were urged to ‘go the extra mile’ in an attempt to secure a deal before the hard deadline at the end of the month. Expectations of a ‘No Deal’ have been growing and UK related assets could see further volatility over the coming weeks.
Germany will go into a hard lockdown on Wednesday as case numbers remain stubbornly high.
Whilst the forward-looking nature of equity markets means the vaccine roll out remains the key focus, it is also worth acknowledging the damage still being wrought by the virus worldwide. In terms of the vaccine itself, US regulators approved the Pfizer-Biotech product on Friday with a rollout expected imminently. Approval within the eurozone is also envisaged before Christmas with implementation plans currently being devised across individual member states.
Global markets were down last week by -0.3% in euro terms and -0.5% in local terms. Year to date the UK market is down -18.6% in euro terms and -11.9% in local terms. The influential US Market was down -0.5% in euro terms and -0.7% in local terms.
Fixed Income & FX
The US 10-year yield finished at 0.92% last week. The German equivalent finished at -0.62%. The Irish 10-year bond yield finished at -0.31%. The Euro/US Dollar exchange rate finished at 1.21, whilst Euro/GBP finished at 0.90.
Oil finished the week at $47 per barrel. Gold finished the week at $1,824 per troy ounce up 20.2% year to date in local terms and 10.9% year to date in Euro terms. Copper finished the week at $7,755 per tonne.
The week ahead
Tuesday 16th December
PMI data from the US, EMU, UK and Japan foes to print as Fes also meets.
Wednesday 17th December
No change in policy is expected as the Bank of England meets.
Thursday 18th December
The Bank of Japan meets and the latest UK retail sales data is published.