Summary
• US cases, hospitalizations and excess deaths show limited vaccine impact on the pandemic.
• In advanced economies, neither infections nor deaths seem related to immunizations.
• The limited health impact of vaccines could reflect low vaccination rates, decaying immunity, and that current vaccines target the Alpha variant.
• Still, vaccinations have strongly impacted the economy and markets, providing cover for health policymakers to return to near economic normality.
• The ongoing Covid wave holds three new risks: children seem more exposed; hospital capacity could be threatened more; increased uncertainty could see firms reduce new hires and capex.
Market Implications
• Long bonds, short equities as markets—and Fed–are underestimating uncertainty.
Summary
• US cases, hospitalizations and excess deaths show limited vaccine impact on the pandemic.
• In advanced economies, neither infections nor deaths seem related to immunizations.
• The limited health impact of vaccines could reflect low vaccination rates, decaying immunity, and that current vaccines target the Alpha variant.
• Still, vaccinations have strongly impacted the economy and markets, providing cover for health policymakers to return to near economic normality.
• The ongoing Covid wave holds three new risks: children seem more exposed; hospital capacity could be threatened more; increased uncertainty could see firms reduce new hires and capex.
Market Implications
• Long bonds, short equities as markets—and Fed–are underestimating uncertainty.
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