The Week That Was 11/13

Pfizer released preliminary results from their COVID-19 vaccine trial that indicated 90% effectiveness, much better than expected. Moderna indicated that they expect to release favorable effectiveness data soon as well. Equities rallied, credit spreads tightened, and longer interest rates rose on the news.

The markets reacted positively to news that effective COVID-19 vaccines will likely be widely available within the next 6-12 months. This would enable economies to more fully reopen. However, there is still going to be a period of months where COVID-19 infections are likely to continue rising. Measures to contain the spread of the virus during that time as well as the impact of such measures since last March could have longer-lasting negative economic effects.

October consumer prices were unchanged while producer prices rose 0.3%. Year-over-year, consumer prices are up 1.2% and producer prices have risen 0.5%. Inflation remains benign and is unlikely to cause the Fed to change rate policy anytime soon.