Stocks advance again

The main exchange rates are reasonably steady this morning. The euro is trading at about $1.1850 against the dollar, which is in and around the middle of the range that has prevailed recently, and just below 90p against sterling, while the pound is still hovering around the $1.32 level against the US currency. Meanwhile, core bond yields were unchanged at the start of the week, at 0.90% and -0.55% in the case of US and German 10-year yields respectively

Some more positive news on the COVID-19 vaccine front helped push equity markets higher yesterday with European and US stocks gaining between 1% and 2%. Stocks in the US set new all-time highs in the process , while European equities have gained about 17% since the start of November having underperformed somewhat prior to that

ECB member De Guindos says  “the lockdowns we have seen will have an impact on the euro-zone economies in the fourth quarter, which will be weaker than expected” adding that the ECB “will review all (policy) instruments in December…will look at projections for inflation and decide on the instruments with the two fundamental ones being the ones used during the pandemic: QE (bond purchases) and TLTROs (liquidity provision to commercial banks)”

The Vice-Chair of the Fed, Clarida, says “the news (on the vaccines front) has been very good” and he has got “more conviction…that the recovery from the pandemic shock in the US can potentially be much more rapid than from the global financial crisis”

Data due today includes retail sales and industrial production in the US