The collective sigh of relief from governments and households around the world was an audible soundtrack to the rollout of a vaccine for Covid-19 last week. The rapid development and trial of a range of new vaccines has been rightly hailed as a triumph for medical science. In many quarters some concerns remain around the speed of the deployment for these vaccines, but after months of lockdown restrictions and the significant damage wrought on the global economy, the majority of citizens are delighted to welcome what feels like the beginning of the end of the pandemic’s devasting effect on the global community.
Risk markets have also celebrated the news, despite large swathes of Western developed market economies still under very restrictive measures to contain the virus. Economic data for the fourth quarter in most of these economies are likely to reflect the continued lack of normal levels of household spending and activity, but markets are looking through this period to the brighter days of spring and summer of 2021 and the anticipated vigorous economic recovery on the back of a wide ranging inoculation programme.
World’s largest economies (30 year yield versus median age)