Daily Commentary BY THE CURVE TEAM –

More Vaccine Results

17th of November, 2020

Following the announcement of Pfizer’s 90% effective vaccine last week, Moderna have published their own results overnight.

Moderna’s results were extremely promising, showing 94.5% effectiveness. An alternate vaccine will be very useful to inoculate the world.

Pfizer’s vaccine is difficult to distribute as it requires very cold storing. Moderna’s does not require this, which poses a more viable means to mass distribute the vaccine.

Diversity is also useful in that different vaccines may vary in their benefits. Pfizer and Moderna’s results are preliminary, so evidence may come through that one vaccine is more effective on the elderly or may prevent being contagious. With more vaccines still being tested, the more that prove effective the better.

These positive results come as South Australia recorded one case from yesterday following its cluster from the weekend. As a result of the cluster, Western Australia, Northern Territory, Queensland and Tasmania closed the border to South Australia. South Australia also tightened restrictions to reduce the likelihood of it spreading.

Border closures will hit the economy in the short term, although shouldn’t be as severe as Victoria’s closures given South Australia is a smaller share of Australia’s GDP. The situation is also far from out of control, with only one case recorded yesterday.

RBA Lowe spoke overnight and reiterated much of the reasoning behind the recent monetary policy changes. A focal point was the exchange rate.

Lowe cited in his speech the dovish policies of overseas as putting upward pressure on the Australian Dollar. In the Q and A when asked about negative rates, he said the only reason the RBA would consider them is if other countries pursued them, which would leave the Australian Dollar higher. These remarks from Lowe emphasise that monetary policy decisions will continue to be at least partially dependent on the rest of the world.

The RBA Minutes for the November board meeting will be released today. NSW will also release their budget. Spending vouchers up to $100 per person to be spent on food and entertainment is set to be one policy.

Josh Stewart

Associate- Money Markets