“A new Covid wave is leading investors to fly to safety, provoking yields to drop roughly 10 bps across the whole US yield curve.
“But investors are prone to shoot first and ask question later and not stand in the way of these sorts of position unwinds.
If the new variant does deliver its potential we need to think about a globally soft/flat Q4 and Q1 GDP growth.
As long as markets are faced with a familiar virus situation that can be overcome with a sufficiently crafted and executed vaccination strategy, the reactions will be muted, as we have seen with the short-lived bond market rally last week when new lockdowns were announced in Europe.
As one potentially mitigating factor, the world is now on high alert and has ramped up its capacity to develop, adjust and produce vaccines.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day.