We will learn more about Omicron in the coming days, especially on its risks for hospitalisations and its ability to evade the current crop of vaccines. Investors appear to want to fade the sell-off on Friday. Already, US stock futures and bond yields have retraced around 40% of the Friday sell-off (Charts 1 and 2). Euro-area stocks are showing less of a strong recovery – it has only retraced 20% of the move. Given that the Euro-area was already experiencing a large COVID wave and increasing restrictions, Omicron only adds to further restriction risks (Chart 3). But the two big questions are around the US and EM.
We will learn more about Omicron in the coming days, especially on its risks for hospitalisations and its ability to evade the current crop of vaccines. Investors appear to want to fade the sell-off on Friday. Already, US stock futures and bond yields have retraced around 40% of the Friday sell-off (Charts 1 and 2). Euro-area stocks are showing less of a strong recovery – it has only retraced 20% of the move. Given that the Euro-area was already experiencing a large COVID wave and increasing restrictions, Omicron only adds to further restriction risks (Chart 3). But the two big questions are around the US and EM.
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