Daily Commentary BY THE CURVE TEAM –

Vaccine Updates

10th of October, 2020

An update on the efficacy of one Covid-19 vaccine has impacted markets overnight.

The Pfizer vaccine has shown very encouraging early results which were released overnight. It is said to be 90% effective, which beats a regular flu shot’s effectiveness of around 50%.

As a result of the news, equity and oil markets in particular surged. A vaccine would enable lockdowns to be removed and borders to be opened, which would mean businesses and overall demand would bounce.

Moderna, the vaccine that Australia has already made an arrangement to disperse should it prove effective, is not as advanced in trials as Pfizer. However, the success of Pfizer bodes well for Moderna, who also has more advantageous distribution attributes, such as length it can be stored and it not requiring dilution.

NAB’s monthly business survey out today will not be able to account for the vaccine news today. However, it will be able to factor in at least part of the improving Covid-19 case numbers over October.

Even still, business sentiment and confidence are expected to still remain well below long term averages. Should the vaccine come to fruition and be distributed by mid next year as the government expects, there will be a plausible way for confidence and sentiment to return to pre-Covid levels.

Today Curve will release our monthly economic insights for November. We discuss the path to recovery and what it hinges on.

Josh Stewart

Associate- Money Markets