Good morning. There’s a blow for coronavirus drug remdesivir, an unexpected divide in Washington and yet another warning on Brexit. Here’s what’s moving markets.
It’s been used widely to treat Covid-19 and was among the drugs President Donald Trump received when he was diagnosed with the disease, but the World Health Organization has recommended against using Gilead Sciences’s remdesivir to treat hospitalized patients. “There is currently no evidence that it improves survival or the need for ventilation,” a panel of WHO-convened experts said. That leaves all the more reason to focus on vaccines, then, amid news that BioNTech and Moderna could receive conditional European Union marketing authorization for their products in the second half of next month, putting the bloc on track to start distributing the shots at the same time as the U.S.
There’s more drama in Washington after a dispute emerged between outgoing Treasury Secretary Steven Mnuchin and the Federal Reserve over emergency lending facilities. Mnuchin released a letter to Fed Chair Jerome Powell calling for the return of funding for several Fed lending programs that rely on Treasury’s backing. Minutes later, the central bank issued its own statement urging that “the full suite” of facilities be kept in place. The parting of ways is a rare moment of discord as America confronts the economic impact of a new surge in coronavirus cases. U.S. equity futures slid, though European contracts are steady.
You know as well as we do that a Brexit deadline is not really a deadline, but even so, the leaders of France and Belgium have urged the European Union to step up preparations for a no-deal Brexit at the end of the year in case negotiations with the U.K. fail to yield a last-minute breakthrough. The countries called on their peers to make contingency plans in case talks to sign a trade and security agreement fail, according to two people with knowledge of the discussion. The bloc can’t go on hoping that the disagreements with Britain will resolve themselves, the people said.
A new bond-ordering system backed by the world’s biggest banks made its much anticipated debut Thursday, the first step in a process its backers predict will transform the way trillions of dollars of company debt is marketed and sold to investors. Founded by firms including Barclays, BNP Paribas, Deutsche Bank and a host of major U.S. names, DirectBooks’ launch comes amid a surge in corporate debt issuance, and as remote working increases the need to electronify a process that’s still largely handled via phone and instant messaging.
U.K. retail sales and Eurozone consumer confidence are on the data slate, while software firm Sage Group reports earnings.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
And finally, here’s what Cormac Mullen is interested in this morning
While there doesn’t seem to be the same sense of complacency that characterized markets before the September risk-asset selloff, a bullish investor narrative remains firmly in charge. Citigroup’s Global Risk Aversion Index, a combination of market indicators across asset classes and geographies, has fallen back below zero for the first time since the pandemic roiled markets earlier this year. That points to market stress now being below its long-term historical average as investors bet on a possible return-to-normal for much of the global economy next year. The move comes despite concern about the impact of tougher virus restrictions weighing on optimism over progress toward a vaccine. Much recent market commentary has asked how much good news is priced in — a beermat check on global stock valuations and credit spreads suggests quite a lot. The world is still in the middle of a worsening pandemic and there are many hurdles to climb before it and its impact are even close to being resolved. A higher degree of risk aversion in market pricing still seems appropriate.
Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo.
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