Despite some positive rumours over the state of Brexit negotiations, the Pound is starting the week on the back foot. This is because we’re seeing a risk off theme emerging, as governments are having to take more stringent measures in Europe to try and slow the second wave of the virus. As such people are going to have less freedom and therefore less opportunity to spend and keep economies ticking over. Spain introduced a nationwide curfew over the weekend that is set to last for six months. There are also suggestions that they, along with France and Italy, may go into a national lockdown this week as infection rates surge. France recorded 52,000 new cases yesterday.
The Daily Mail is running a story that one UK NHS trust has been briefed that they should start to prepare for a vaccination to be rolled out in early December. This is a slightly more robust story than the rumours we were hearing on Friday and also coincides with news that the Oxford vaccine is showing that it builds an effective immune response in the over 55’s. The news is still not being widely confirmed, as there are plenty more data to crunch over the coming weeks, but it is all sounding pretty positive for the vaccine, which appears to be the global frontrunner. The US FDA have allowed AstraZeneca to resume their trials, after them being put on hold last week and Dr Anthony Fauci was on with Andrew Marr yesterday saying that December is a realistic timeline, though that plenty of challenges still remain and it wouldn’t be until Q2 next year that enough of the population in the US would be vaccinated for life to resemble some kind of normality.
There’s another round of covid infections in the US government, this time in Mike Pence’s inner circle. Mr Pence has continued on the campaign trail, despite at least four of his aides, of which he will have been in close contact with, testing positive. What doubles down on stupidity here is that Mike Pence is the head of the US’s Coronavirus Taskforce! Mike Pence is due on the Senate floor today to lead the confirmation vote of Supreme Court nominee Amy Coney Barrett, which now risks becoming another super spreader event. Unsurprisingly the Senate Democrat leader Chuck Schumer has strongly criticised the move and advised his Senators to vote quickly and from a safe distance.
Amy Coney Barrett’s ascendance to the bench of the Supreme Court is a massive feather in the cap of Trump. This run down by the Wall Street Journal gives a good insight on where she stands on key issues and what might now change.
The positivity on Brexit has come from Michel Barnier extending his stay in London to the middle of this week, before everyone jumps on the Eurostar and heads to Brussels from Thursday onwards. Emmanuel Macron is sticking on fishing and isn’t happy with any deal that diminishes French fishing rights, but it is said that Angela Merkel may intervene and get him to accept less access to UK waters. The Guardian is citing senior figures in European governments who think that Boris would wait and see what the result of the US election is before he pulls the plug on negotiations. They think that he’d be less likely to go no-deal if it were a Joe Biden win, as this would be too risky in terms of getting a trade deal out of the US to try and hold up as some kind of compensation to the British public. They say that Biden views the UK in a slightly less bright light now that we won’t have the influence in Europe that we once did and that he is likely to shift his focus to improving relations and trade ties with France and Germany, possibly even via a US-EU trade deal that might take priority. With that being the case and the election just over a week away, it would be great to think that this week things can really get moving.
Today is the start of a the four day ‘plenum’ in China. This is the ruling Communist Party’s meeting at which they will agree their economic development plan for the next five years. More interesting than the five year plan is the news that president Xi also wants to establish a 15 year plan called “Vision 2035”, which is raising the prospect of him intending to stay in his role until then. Mr Xi has already led the country for seven years and if he stayed to 2035 he would be 82 years of age.
Data is very thin on the ground today and as such we might find that risk-off theme become self-perpetuating if there is nothing to lighten the mood. There’s a very outside chance Nancy Pelosi gets an agreement in principle with Steve Mnuchin on a stimulus bill that they could take to Capitol Hill to be voted on, but nobody is counting on it.
Have a great week