Weekly Market Update

Author : Rachel Poole
Date : February 20, 2021

Global Market News

Global equities pause rally
Global equities lost some ground this week, as the rally seen over the last couple of weeks paused. The yield on the 10-year US Treasury note rose to 1.34% (which represents a significant increase since the beginning of the year), while the price of a barrel of West Texas Intermediate crude oil ended the week at $58.97. Volatility, as measured by the Cboe Volatility Index (VIX) stuck right around 22.

Yellen says an infrastructure package is in the works
This week US Treasury Secretary Janet Yellen ensured investors that the Federal Reserve has the tools to deal with a surge in inflation should the nearly $2 trillion stimulus package put upward pressure on prices. She also said the White House will likely propose a second economic recovery package later in the year that invests funds in longer-term investments like infrastructure, renewable energy, education, and research and development, adding that tax hikes will likely be part of the proposal.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 111,000,000 Global Covid-19 deaths: 2,450,000
US Confirmed Covid-19 cases: 28,000,000 US Covid-19 deaths: 494,000
*As of Friday evening

Israel vaccine study may lead to increased availability
An Israeli survey of 9,000 citizens reveals that one dose of the Pfizer/BioNTech vaccine decreased infections by 85% which is not much lower than the 95% efficacy rate of the two-dose program. The study also found that the vaccine can be stored safely using consumer-grade freezers instead of the ultracold equipment previously thought necessary. Spacing out the Pfizer/BioNTech doses could allow for faster distribution of the vaccine. The United Kingdom has already adopted the approach and has produced promising results.

Geopolitics Spotlight

Ngozi Okonjo-Iweala becomes first woman and first African to lead WTO
Ngozi Okonjo-Iweala has been appointed to lead the World Trade Organization (WTO) as the organization seeks to revive its influence over global economic rules. Okonjo-Iweala is the first woman and first African to lead the organization. She made her name fighting corruption as Nigeria’s finance minister in the 2000s and is a welcomed selection by many global trade officials.

EU-Russian tensions escalate over Navalny imprisonment
Russia has rejected the European Court of Human Rights’ (ECHR) demand to release opposition leader Alexey Navalny out of concern for his life. Russia is a member of the Council of Europe, a body of which the ECHR is a part but has refused to abide by the ruling saying it is “unreasonable and unlawful”. The jailing of Navalny, which has sparked the largest anti-government demonstrations Russia has seen in years, has put a new strain on Russia-EU relations. All eyes are on the EU as it decides how to respond to Russia’s aggression.

US Social & Political Developments

US agrees to hold nuclear talks with Iran
The Biden administration has agreed to meet with the signatories of the 2015 Iran nuclear agreement if invited by the European Union. However, Iran is holding strong on its position that it will not enter negotiations until the US removes all sanctions on Iran. Furthermore, it has pledged to ban inspections by the United Nations nuclear watchdog if the US does not begin easing sanctions next week. President Biden has previously refused to lift all sanctions until Iran returns to compliance with the agreement.

Senate fails to garner enough votes to indict Trump
The Senate voted 57-43 in favor of convicting former President Donald Trump but fell short of the two-thirds majority by ten votes. Though Trump was acquitted of inciting insurrection at the Capitol on January 6th, House Speaker Nancy Pelosi has suggested that the House of Representatives will consider creating an investigatory commission on the attack of the Capitol.

Corporate/Sector News

Energy prices rise after Texas cold snapCrude oil futures and natural gas prices climbed this week after a cold snap and ice storm in Texas halted gas exports. More than a million households in Texas still did not have electricity on Thursday because of the failure of the state’s highly decentralized electricity model. In response to the crisis, Texas Governor Greg Abbott banned the export of the state’s natural gas, causing natural gas prices to soar. Massive refineries, like Exxon Mobil and Marathon Petroleum, have been forced to halt production, threatening the nation’s supply of gasoline and diesel.

Beijing explores ways to hurt US defense companies
China is looking to hurt US defense contractors by limiting the export of rare earth minerals which are critical for the manufacturing of sophisticated tech and weaponry. Beijing’s Ministry of Industry and Information Technology has proposed draft controls on the production and export of rare earth minerals from China. The country controls about 80% of the global supply.

Ford announces zero-emissions goal for Europe
Ford announced its entire passenger vehicle range in Europe would be “zero-emissions capable, all-electric or plug-in hybrid” by 2024. The company also announced it intends to reach a “completely all-electric” offering by 2030. The automaker is doubling down on investments in electrification to reach its goals, announcing it would invest $22 billion through 2025.

This week from BlackSummit

Stochastic Paths and Market Abnormalities: Rootlessness and the Contingencies of Cycles of Tragedies – John E. Charalambakis
Geopolitical Challenges and Statecraft – Rachel Poole & Tyler Thompson

Image of the Week

Video of the Week

India, Covid-19 and vaccine politics
Source: Financial Times