Coronavirus vaccines and the latest news on restrictions to prevent the spread of the disease will be in focus this week as the holiday season nears.
Brexit trade deal talks were thrown a lifeline over the weekend when the UK and EU agreed to “go the extra mile”.
Deal or no deal will be the deciding factor when the Bank of England sets policy this week, while the Federal Reserve and Bank of Japan also hold their last meetings of 2020 alongside a host of other smaller central banks, though not many policy changes are on the cards.
When it comes to looking in the rear-view mirror to assess economic damage the virus has wrought, the main data point for the week will be December’s flash purchasing managers’ indices for Japan, Europe and the US.
The Week Ahead will take a holiday and return on Sunday January 3
Coronavirus
Aeroplanes and trucks will continue to distribute the first authorised coronavirus vaccines across all 50 US states. Workers at manufacturing plants in Wisconsin and Michigan began packing doses of the shot made by Pfizer and its German partner BioNTech on Saturday, following the decision by the US drugs regulator to approve it on an emergency basis on Friday night.
Boeing is expected to hold a background briefing on Tuesday on the safe transportation of the vaccine.
The US Food and Drug Administration is on Thursday scheduled to discuss whether to authorise a vaccine developed by Moderna.
Germany will go into a hard lockdown from Wednesday, with all schools and shops closed, as it battles to control a big surge in coronavirus infections.
The decision was made after the country reported a record of almost 30,000 new infections and 598 deaths from the disease on Friday.
Most shops will be closed from December 20 until January 10, as will hair salons, cosmetic studios, massage parlours and tattoo shops. Schools will remain closed during the period and companies have been encouraged to allow employees to work from home.
Finland and Norway have offered medical assistance to Sweden, as their neighbour faces an increasingly severe second wave of coronavirus that has stretched clinical staff and intensive care capacity to the limit in some areas.
Sweden has yet to formally ask for outside help but authorities in Stockholm have requested assistance from the country’s military and could get aid from less hard-hit regions.
England’s strengthened three-tier system of curbs is set to be reviewed on Wednesday, with Londoners being warned that the UK capital could soon be subject to England’s highest tier-3 category.
The country’s leading scientific advisers have told MPs that infections could surge when measures are lifted at Christmas.
Brexit trade talks
The EU and UK will continue talks on Monday after UK prime minister Boris Johnson and European Commission president Ursula von der Leyen held a “useful” phone call over the weekend.
Both sides have recently sounded pessimistic over the prospects for a deal ahead of the end of Britain’s Brexit transition period on January 1, but the talks have narrowed to one main outstanding issue.
Negotiations on Saturday centred on trying to accommodate the EU’s demands for a mechanism that would make tariff-free trade dependent on the two sides maintaining fair competition for business through a regulatory “level playing field”.
Mr Johnson repeated on Sunday that he would like to thrash out a deal through bilateral talks with EU leaders — including Angela Merkel and French president Emmanuel Macron — but had been told that negotiations must be conducted on behalf of all of the bloc’s 27 member states by the commission.
Mr Johnson said the “most likely” outcome remained a no-deal Brexit on World Trade Organization terms on January 1, and urged businesses and individuals to continue preparations for such a scenario.
Also in the UK
The Supreme Court is expected to hand down its decision on Heathrow airport’s appeal to overturn a block on its expansion plans on Wednesday
A ruling is expected on Wednesday in a landmark case on whether the high levels of air pollutants around the family home of a nine-year-old girl played a role in her death. An initial inquest found the girl died from acute respiratory failure, but this conclusion was quashed by the High Court six years ago following new evidence about local air pollution
Also in the US
Congress enters a final year-end sprint on Monday to pass measures funding the government for a new year and providing more aid to a nation struggling to control coronavirus. Republicans and Democrats face a Friday deadline to enact a broader, $1.4tn “omnibus” spending measure for all government agencies from the Pentagon to national parks
The Electoral College will meet on Monday to formally cast its vote for the next president
President-elect Joe Biden will on Tuesday jump into the fiery Senate campaigns in Georgia, two contests that could help push his legislative agenda through Congress if Democrats win both seats
Companies news and earnings
The US Federal Reserve will on Friday release an unprecedented second set of stress test results for the country’s largest banks, which will show how well they are equipped to deal with the economic downturn brought on by the pandemic.
Shareholders of Norwegian Air Shuttle will vote on Thursday on the proposed measures to save the low-budget airline from collapse, including a debt-for-equity swap and the sale of new shares.
FedEx reports on Thursday, when a rise in consumer spending and a surge in online shopping is likely to play out well.
Nike is on Friday set to report a rise in its quarterly revenue, boosted by demand for sports shoes and clothing from people taking up more outdoor exercise.
In the UK, Dixons Carphone, another high-street retailer that has suffered during the pandemic, reports on Wednesday. The group announced in August further job cuts and restructuring in a move to lessen the damage.
Outsourcing group Serco, which is running large parts of the UK government’s coronavirus test-and-trace and virus testing services, is releasing a pre-close update on Thursday.
SSP Group, the travel food retailer behind outlets such as Upper Crust and Caffè Ritazza reports on Thursday. It has guided to improving sales lately, though disruption caused by the pandemic is expected to lead to a loss this year. Investors will hope for a positive outlook for next year as vaccines are approved, which could ease global travel restrictions.
Central banks
The Federal Reserve holds its final policy meeting of the year on Tuesday and Wednesday, when it is poised to issue new guidance extending its emergency bond-buying programme, as it grapples with the need for another monetary boost to buttress the US economic recovery.
US central bankers are widely expected to approve language specifying that the $120bn per month in debt purchases launched at the start of the pandemic will continue until the recovery meets certain conditions, according to senior economists and Fed watchers.
If agreed, the change would make it harder for the central bank to make an early move to wind down its bond purchases, cementing its easy monetary policy for years to come. The shift would complement its pledge to keep interest rates close to zero until inflation is on track to exceed 2 per cent and the economy reaches full employment.
In addition, the Federal Open Market Committee will be forced to consider whether bolder monetary easing through the asset-purchase programme is warranted.
With Covid-19 cases rising, lay-offs surging and confusion on Capitol Hill about the prospects for fiscal stimulus, some economists say the Fed may have to act now to meet its pledge to do more to support the recovery if needed.
Further reading
Fed poised to extend crisis bond-buying programme
Market Questions: Will the Fed adjust its asset purchase programme?
The Bank of England will announce policy for the last time this year on Thursday. Much will depend on the state of post-Brexit trade deal negotiations on the day — after the EU and UK agreed to continue talks over the weekend.
If a trade deal is reached the central bank is likely to vote 9-0 to continue with its current policies.
However, if talks collapse, the BoE would look at cutting rates to zero and accelerating the pace of quantitative easing.
The Bank of Japan, the last of the week’s big hitters, announces its policy decision on Friday, with rates likely to stay unchanged. The bank is also set to extend special pandemic support measures for businesses.
Of the others Russia has kept the market divided on whether it will cut again or hold on Friday, as inflation continues to rise and remarks from governor Elvira Nabiullina suggesting caution should prevail.
The Swiss National Bank and Norway’s central bank meet on Thursday, with no changes expected.
In Africa Uganda’s central bank could cut again on Monday, while in Mozambique policymakers will probably hold for a third straight meeting on Wednesday.
In Asia no changes are expected in Indonesia, the Philippines and Taiwan.
It’s likely to be a similar story in Latin America, with Colombia’s central bank all but certain to keep rates unchanged on Friday. Banco de México is also set to hold on Thursday.
Brazil’s central bank on Tuesday publishes the minutes of last week’s meeting where it kept its key rate at a record-low 2 per cent.
Economic data
Flash PMIs in Japan, Europe and the US through the week will give investors an early take on how economies held up in December.
Manufacturing and services are forecast to improve in France and the UK, while both readings are slated to fall in Germany and the US.
However, the divergence experienced throughout the pandemic is likely to continue, with manufacturing faring better than services. Still, the UK and US should have readings above the crucial 50 benchmark that signals expansion.
The US also has industrial production figures on Tuesday and retail sales on Wednesday.
Thursday brings US initial jobless claims, which accelerated last week to their highest level since mid-September, jumping to 853,000 after a fresh surge in coronavirus cases spurred a new round of shutdowns that have stymied the labour market’s recovery.
China has industrial production, retail sales and investment data out on Tuesday that is likely to show the economy strengthened in November.
The UK has labour figures out on Tuesday, which are set to show relatively strong wage growth.
The Bank of Japan will issue its Tankan business survey on Monday as smaller companies continue to suffer during the pandemic. Japan also has trade data due on Tuesday.
India has inflation data on Monday that is likely to fall well above the central bank’s target band.
If this email was forwarded to you, and you’d like to receive the Week Ahead in your inbox on Sundays, click here to sign up.
Additional reporting by Elena Losavio
Source: Economy - ft.com
