Daily Commentary BY THE CURVE TEAM –

Mixed Virus News

25th of August, 2020

Contrasting news of vaccine progression and re-infection of Covid-19 only add to the uncertain outlook.

Since the beginning of the pandemic the economic outlook has been highly uncertain. Economic forecasts have varied greatly, and upside and downside scenarios have been required.

The case for the upside scenario is a vaccine. There are positive signs from Oxford, to the point where the US president Trump has indicated he will attempt to ignore regulatory standards and push production out early. This can be interpreted badly though, as ignoring regulatory standards poses risks should the vaccine have unintended consequences.

Blood transfusions from recovered patients has also been cited as helping recovery rates. So even if a vaccine is not found, there is potential upside in the virus not being as deadly going forward.

On the downside though, is reports out of Hong Kong university of re-infection from the virus. This would liken the virus to the common cold and flu, in that there are different strains that a single vaccine would not be able to eliminate.

If the virus were not able to be vaccinated against, the question for the economy would be how quickly the world changes its tact about suppressing and eliminating the virus. To do so requires considerable cost to economies, namely from border closures which inhibits the flow of people, goods and services.

Given the range of possible scenarios and the uncertainty within even those scenarios, the future outlook is very difficult to predict.

Payroll data for early August is out today. This will reflect the latter stages if a stage 3 lockdown in Victoria, which is expected to drag payrolls down despite recoveries in the rest of the country.

Josh Stewart

Client Relationship Manager