News in Charts: Vaccines can’t come soon enough

The Moderna vaccine is expected to become the second vaccine approved by a Western government to assist the fight against COVID-19 — possibly as early as today. Last night the external advisory panel of the US Food and Drug Administration (FDA) voted by 20:0 to approve Moderna, with one abstention, and the FDA is expected to authorise it for emergency use within hours. The move comes a week after the FDA followed the UK and Canadian authorities in approving the Pfizer/BioNTech vaccine, and began distributing the first 2.9 million doses. The US has suffered more than 300,000 COVID-related deaths, including 3,580 on Wednesday. The chief adviser to Operation Warp Speed, the US COVID vaccine programme, has suggested that at least 100 million Americans in mostly high-risk groups should be vaccinated by the end of 2021 Q1 and the whole population by the end of Q2. The EU Medicines Agency meanwhile will meet to discuss the Pfizer/BioNTech vaccine on 21 December, and the President of the EU Commission suggested it was likely Europeans would begin to be vaccinated before year-end. The success of the various vaccine trials and expectations of future rollouts are key drivers behind our expectation of a strong global recovery from 2021 Q2, as outlined in our Global Economic and Markets Outlook for 2021 Q1.

The near-term boost to economies will be modest, however, given that it will take several months to vaccinate significant proportions of populations. Indeed, strict lockdown measures in several  European countries point to sharp economic contractions in 2020 Q4.

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Amid surging new cases, Northern Ireland decided last night to impose a lockdown from 26 December, while London and much of Southeast England moved into the highest tier of restrictions short of a lockdown. Yesterday Germany entered a hard lockdown due to last until 10 January, after recording 952 deaths on Wednesday, while the Netherlands has also begun a five-week lockdown. Both the European Central Bank (ECB) and the Bank of England (BoE) expect their economies to contract by around 2% in Q4. Growth will be more resilient in Q4 in the US, where the surge in COVID cases and reintroduction of lockdown measures occurred later. Atlanta and New York Fed Nowcasting models point to annualised GDP growth of 11.2% and 2.45% respectively. Nevertheless, US weekly jobless claims have begun to rise, indicating a further slowing in the labour market in December; and the lockdowns will weigh on growth in the US and elsewhere in coming months.

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In the US, a softening labour market and renewed lockdowns have put further pressure on Congress to agree a fresh fiscal package. A $900 billion stimulus is edging closer to approval, but is subject to some last-minute, bi-partisan disagreements. Republican senator Pat Toomey wanted to add a provision into the legislation that would prevent the Federal Reserve from renewing some of the emergency lending facilities that have purchased corporate and municipal debt and asset-backed securities. At the time of writing, it remains unclear whether the disagreements will derail a deal.

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