Having a Trading Plan is More Important than Just Focusing on NFP Report

Enough with the focusing already. What’s your game plan for trading the U.S. Non-Farm Payrolls report? The focus began when you first saw the report on the economic calendar. Now that you’ve seen the price action this week and saw the reaction to Federal Reserve Chairman Jerome Powell’s lack of concern about a recent sell-off in bonds while sticking to his stance to keep interest rates low for a long time. How do you think traders will react to the headline number if it comes in bullish or bearish?

First of all, no one really knows what a bullish or bearish number will look like, given the massive amount of nonfarm payrolls estimates. If you look on to the Dow Jones number you may have a different interpretation than the guy trading the Bloomberg number or the Reuters number or the Wall Street Journal figure? Shall I go on?

From experience, it’s not knowing about the accuracy of “number” that brings success but how to trade it. Who to follow? How financial markets – bonds, stocks currencies, the dollar, gold – will be affected.

In my opinion, it all starts with the reaction to the number by Treasury traders. They are the smartest traders in the world and they control a lot of money. So latch on to the Treasury futures contract. Do not try to trade the headline number. You’ll get whip-sawed.

Follow the yields. They are what got us here in the first place. While the small time players are being told by the brokers to “focus” on the NFP number, the professionals know that this one report will not recover the 10 million jobs lost during the pandemic.

Do the math? How long will it take the economy to recovery 10 million jobs at a pace of 200,000 jobs per month?  Exactly. This tells me this report could be a dud with professionals already preparing for the Fed’s March 17 announcements.

So when you do the math, you see that the report is not that important after all. Furthermore, it’s being called Joe Biden’s first jobs report. That’s true so we don’t even have a trend yet in the labor market.

However, I do have to add that if the number comes in below last month’s 49,000 or negative then those betting on a fast recovery and high inflation will have a hard time building a case for higher Treasury yields or even a faster exit from monetary policy by the Federal Reserve.

NFP Trading Tips

Don’t trade off of the headline jobs number. Use the June 10-year Treasury note futures contract for guidance. There are just too many Non-Farm guesses out there. You won’t be able to tell if it’s bullish or bearish. You also may want the T-notes to settle before making your move. Sometimes there is a reaction to the headline number and a different reaction to the unemployment rate. This causes whipsaw price action. Don’t force a trade either. Sometimes there is little reaction to this report.

If T-notes are moving lower, rates are rising. This tends to be bearish for stocks bonds and gold.  If T-notes are moving higher, rates are falling. This tends to be bullish for stocks, bonds and currencies.

With all these correlations going on, make sure you don’t double or triple up in the same direction. You’ll lose it twice or three times as fast if the market turns suddenly. Also make sure that you don’t end up at some point with a bullish gold and bullish dollar position at the same time. That could confuse you.

If you stick to following the Treasury futures and understand their relationships with the other markets at this time then you should be alright. Remember, don’t waste your time focusing on the report, focus on the direction of yields.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Tumble, Gold Dumps , Dollar Jumps Amid Treasury Yield Spike as Powell Signals Inflation is Ahead

A wave of heavy selling pressure and heightened volatility hit the financial markets on Thursday after Federal Reserve Chairman Jerome Powell failed to reassure investors that central bank policymakers would keep surging bond yields and inflation expectations under control.

At 21:00 GMT, March E-mini S&P 500 Index futures were down 1.02%, June 10-year Treasury Notes were off by 0.42% and April Comex gold futures had lost 1.13%.

The major currencies were also lower as the March U.S. Dollar Index soared 0.76%.

Powell Reiterates Fed’s Stance

Powell said the economic reopening could “create some upward pressure on prices,” reiterating that the central bank would be “patient” before changing policy even as it saw inflation pick up in what it expects would be a transitory fashion.

The Fed chief did acknowledge the rapid rise in rates recently caught his attention, but said the Fed would need to see a broader increase across the rate spectrum before considering any action, he said during the Wall Street Journal Jobs Summit Thursday.

Powell said price increases above the Fed’s 2% target for a couple quarters or more would not cause consumers’ long-term inflation expectations to materially change.

“We want inflation expectations to be anchored at 2%,” Powell said. “Inflation is running below 2% and has done so since the pandemic arrived.”

Is the Fed Losing Control of Monetary Policy?

Powell and his policymakers have until March 17 to regain control of monetary policy or they could face a creditability issue with the financial markets that could lead to a surge in volatility.

“With long rates rising in response to his commentary, we are again seeing a market that is taking control of monetary policy from the Fed,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The Fed has put themselves in a tough situation and the only way out is if inflation does not rise further and does not get to their 2% target. If it does, they have a problem because they will be afraid to confront it with higher rates if they remain so focused on employment.”

Still others see a positive outcome.

“There’s a growing worry that the economy may be running away from the Fed. While the thought of rapid change could be enough to scare investors now, we see higher inflation as a long-term positive for the market,” said Lindsey Bell, chief investment strategist for Ally Invest.

“We’re still seeing historically low levels of inflation, so it would take a lot of change for inflation to get out of control,” Bell added.

What a Difference a Year Makes …

Last year it was bad news was good for stocks and gold. This year, we’re back to good news is bad for those assets. Earlier today, the U.S. reported that weekly jobless claims were better than the forecast, a small sign of an improving labor market. However, with that kind of news, the market moved interest rates slightly higher on expectations of better economic growth. Traders reacted by dumping stocks.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Index Futures Attempting to Rebound from Thursday’s Rout

The major U.S. stock index futures are putting in a mixed, two-sided performance in the overnight session, with buyers shrugging off earlier weakness but still trying to recover from yesterday’s steep sell-off. Capping gains and continuing to rattle investors is a surge in interest rates.

At 08:40 GMT, March E-mini S&P 500 Index futures are trading 3843.25, up 15.00 or +0.38%. March E-mini Dow Jones Industrial Average futures are at 31407, up 36 or +0.11% and March E-mini NASDAQ-100 Index futures are trading 12899, up 67.50 or +0.53%.

Earlier in the session Dow futures dropped 203 points, after trading in positive territory. S&P 500 futures and NASDAQ 100 futures both also traded in negative territory. Contracts tied to all three indexes appeared to rise and fall as the rate on the 10-year Treasury note fell and rose, respectively.

The early comeback on Friday follows Thursday’s negative regular trading session.

Thursday’s Recap

In the cash market on Thursday, the benchmark S&P 500 Index lost 2.5% to clinch its worst day since January 27 while the tech-weighted NASDAQ Composite shed 3.5% and suffered its biggest one-day sell-off since October 28. The blue chip Dow Jones Industrial Average dropped 559 points, or 1.8%, slipping from a record high.

Wall Street’s main indexes were driven lower as surging U.S. Treasury yields took the shine off stocks now that a strong economic recovery looked more certain and investors clung to concerns that inflation would rise.

The S&P 500 was down more than 2% at one point, and retreating technology stocks dragged the NASDAQ down more than 3% as the benchmark 10-year note yield surged more than 20 basis points to a one-year high above 1.6%.

Sectors and Stocks

The S&P 500 Technology sector fell 3.5%, as did communication services, which slid 2.6%, among the sectors that powered the market’s rally in 2020.

The S&P 500 Growth Index is nearly unchanged in February, sharply underperforming the value index, which has gained more than 7% on optimism related to a post-pandemic reopening of the economy.

Apple Inc, Amazon.com Inc, Microsoft Corp, Alphabet Inc, Facebook Inc and Netflix Inc dropped 1.2% to 3.6%.

Tesla Inc fell 8.1% after a media report that the electric-car maker told workers it would temporarily halt some production at its California assembly plant.

Moderna Inc jumped 2.5% after the drugmaker said it was expecting $18.4 billion in sales from its COVID-19 vaccine this year.

Stock Market Internals

Declining issues outnumbered advancing ones on the NYSE by a 6.71-to-1 ratio; on NASDAQ, a 7.36-to-1 ratio favored decliners.

The S&P 500 posted 71 new 52-week highs and no new lows; the NASDAQ Composite recorded 202 new highs and 39 new lows.

Volume on U.S. exchanges was 15.84 billion shares, compared with the 15.61 billion average for the full session over the last 20 trading days.

Economic News

Data showed fewer Americans filed new claims for unemployment benefits last week as COVID-19 infections fell, but the near-term outlook remained unclear after winter storms wreaked havoc in the South this month.

For a look at all of today’s economic events, check out our economic calendar.

Bond Yields Surge Lead to a Significant Sell-off in Financials and Precious Metals

The hardest-hit stock indexes today were undoubtedly the NASDAQ composite and the Russell 2000. The NASDAQ composite experienced its worst trading day in four months, giving up
– 3.45%, or 460 points, to close at 13,138.5143.

Nasdaq

The Dow Jones Industrial Average recovered slightly from the intraday low in which the Dow traded roughly 650 points lower. The net result of selling pressure in the Dow was a drawdown of – 1.75%, or 559.85 points taking that average to 31,402.01. The S&P 500 lost 2.45% or a decline of 95.18 points, with that index closing at 3829.25.

The precious metals complex lost significant ground, with gold futures losing $25.80, or – 1.44%, with the most active April 2021 Comex contract closing at $1772.90. Silver also had a significant decline of -1.85% or $0.51.4, with the March 2021 Comex contract closing at $27.345. Platinum futures also felt the selling pressure losing 2.68%, or $33.70 on the day, with the most active April 2021 Comex contract currently fixed at $1224.20.

gold

gold weekly

The underlying event that led to the mass-selling frenzy that occurred today was rising yields in U.S. bonds. The 10-year Treasury note traded to its highest value in a year.

10 year note

According to MarketWatch, “A rise in bond yields, with the 10-year Treasury note TMUBMUSD10Y, 1.519% advancing to above a psychological threshold at around 1.5%, has put pressure on stocks and gold, forcing investors to reassess the relative value of owning either asset against the backdrop of richer rates from risk-free Treasuries.”

There is a contradiction between the recent rise in U.S. bonds and note yields and the Federal Reserve’s current mandate to maintain interest rates between zero and 25 basis points throughout 2021 and into 2022.

The critical difference between investors’ market sentiment and the Federal Reserve’s current mandate is the timeline in which traders versus the Federal Reserve believe it will stabilize the economy. The Federal Reserve remains more cautious and has vowed to keep interest rates exceedingly low. However, market participants are more bullish in terms of the timeline and have been bidding yields on bonds and notes higher.

According to Reuters, members of the Federal Reserve “are shrugging off the surge in longer-term U.S. government bond yields as a sign of growing optimism about the economy, which could pick up steam as more people receive vaccinations against the coronavirus.” The report also cited that “Fed officials said the increase in yields is a reflection of the confidence that a robust economic recovery is on the horizon for the second half of the year, as more vaccines are distributed and with more fiscal stimulus likely on the way.”

The Kansas City Fed President Esther George told farm executives and a virtual event today that, “Much of this increase likely reflects growing optimism in the strength of the recovery and could be viewed as an encouraging sign of increasing growth expectations.”

The majority of Federal Reserve members believe that the recent rise in bond yields does not warrant a central bank response.

The Federal Reserve will continue its current course and mandate of maximum employment by keeping interest rates low and the continued purchase of $120 billion a month in government bonds and mortgage-backed securities. This will continue until the economy is much stronger and headed towards recovery to pre-pandemic days.

For more information on our service, use this link.

Wishing you, as always, good trading and good health,

Gary S. Wagner

Stocks Retreat Amid Rising Treasury Yields

Treasury Yields Hit New Highs

Yesterday, Fed Chair Jerome Powell reiterated his dovish position and stated that interest rates would stay low in order to support the economy. Meanwhile, bond market traders focused on the threat of higher inflation and sold U.S. government bonds, pushing Treasury yields to new multi-month highs.

Currently, the yield of 10-year Treasuries is trying to settle above 1.45%, while the yield of 30-year Treasuries is testing the 2.30% level.

Rising yields have once again put pressure on tech stocks, and Nasdaq futures are down by about 0.7% in premarket trading. S&P 500 futures are also under pressure in premarket trading and are down by 0.3%.

Initial Jobless Claims Declined To 730,000

The U.S. has just provided Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 730,000 Americans filed for unemployment benefits in a week compared to analyst estimate of 838,000.

Meanwhile, Continuing Jobless Claims declined from 4.52 million (revised from 4.49 million) to 4.42 million compared to analyst consensus of 4.47 million.

The better-than-expected Initial Jobless Claims report has already managed to provide some support to S&P 500 futures, but it remains to be seen whether this support will be sufficient enough to push stocks back into the positive territory.

Durable Goods Orders Increased By 3.4% In January

The U.S. has also released Durable Goods Orders report for January which indicated that Durable Goods Orders grew by 3.4% month-over-month in January. Analysts expected that Durable Goods Orders would grow by 1.1%.

The second estimate of the fourth-quarter GDP Growth Rate report showed that GDP grew by 4.1% quarter-over-quarter compared to analyst consensus which called for growth of 4.2%. Slower growth may put some pressure on the market, but traders may choose to focus on the better-than-expected job market data.

Later, traders will have a chance to take a look at Pending Home Sales report for January. Analysts expect that Pending Home Sales remained unchanged on a month-over-month basis after declining by 0.3% in December.

For a look at all of today’s economic events, check out our economic calendar.

Powell Has to Choose His Words Carefully When Addressing the Rise in Yields or Rates Could ‘Rip Higher’

Federal Reserve Chair Jerome Powell is scheduled to speak before the Senate Banking Committee on Tuesday, and investors are expected to look for any potential changes to the central bank’s dovish outlook in recent months. This could be a market moving event because rising bond yields and accompanying inflation fears are adding a level of drama.

Powell is mandated to meet with U.S. House and Senate committees to update Washington on monetary policy semiannually. Normally, the question and answer sessions are routine affairs, but recent rises in Treasury yields and renewed fears of inflation have raised concerns about how the Fed may react to these events, encouraging investors to pay closer attention than usual to these particular hearings.

Pickup in Government Bond Yields Have Drawn the Market’s Attention

“While the 2-year is unchanged for 2021, the 5-year has risen nearly a quarter percentage point as of Friday’s market close while the benchmark 10-year note has seen its yield jump 41 basis points to 1.34%, an area where it hasn’t been since around the same time in 2020, before the worst of the pandemic struck. The 30-year bond yield has surged even more, leaping nearly half a point this year to 2.14%,” according to CNBC.

Powell’s Dilemma

According to CNBC, “Rising bond yields could be signaling the reflation of the economy that the Fed has been pushing and are therefore higher for good reasons. However, should the trend get out of control, the Fed then might have to tighten policy faster than the market expects, offsetting some of the good that has come with the burst in yields.”

“If this testimony was behind closed doors, I think Jay Powell would be quite pleased with what he sees in the economy and the markets,” according to Nathan Sheets, chief economist at PGIM Fixed Income. “But given that it’s public, he’s got to be careful. If he’s too sanguine about the rise in rates, the markets are going to take that as a significant green light for rates to rip higher.”

“The Fed is comfortable with an organic rise in rates reflecting shifts in views on growth and inflation,” he added. “But I think the Fed also wants to be careful that it doesn’t create and amplify a self-sustaining dynamic that pushes rates higher for other reasons.”

Those “other reasons” primarily would be fears that the economy could overheat.

For a look at all of today’s economic events, check out our economic calendar.

Powell Congressional Testimony: Likely to Address Rising Rates, Surge in Inflation, Need for Fiscal Stimulus

Savvy investors are preparing to hear from Federal Reserve Chair Jerome Powell in his semiannual monetary policy testimony before Congress on Tuesday and Wednesday. Powell will answer questions from the Senate Banking Committee on Tuesday, and the House Financial Services Committee on Wednesday.

In recent speeches, Powell has toed the company line, reiterating that Fed policymakers would maintain an easy monetary policy stance in order to support the economy as it emerges from the COVID-19 pandemic. And recent labor market data supports this posturing given the series of disappointing weekly initial jobless claims reports and the disappointing December and January monthly jobs data. With the jobs markets under extreme strain due to the pandemic, it’s hard to make a case for the Fed moving toward a more aggressive policy so its current opinion should remain in place as a safety net.

Analysts agree that the Fed has little wiggle room at this time. Meanwhile, the Fed faces challenges that could upset the balance it is striving to achieve with rates moving higher and the possibility of higher inflation.

“Powell will likely note recent progress in the data but reiterate that the economy is far from fully recovered, thereby defending accommodative monetary policy,” Bank of America economist Michelle Meyer said in a note Friday.

Powell and his colleagues are already on record suggesting they would like to see inflation that averages 2% over time, implying they could tolerate a slightly higher mandate to offset the years of persistently low inflation. However, recent comments from Fed speakers suggest they aren’t certain on how much inflation the economy could width stand. Early concerns could become serious issues given that higher inflation tends to drive interest rates up as well as commodity prices, which could curtail the pace of the U.S. economic recovery if they occur too fast.

“There is a delicate balance:  strong growth could prompt a faster rise in rates, driving up borrowing costs and weighing on risky assets, limiting upside economic growth,” Meyer added.

In his testimony on Tuesday and Wednesday, Powell may reiterate his suggestion that any inflationary spike to the upside over the near-term will be transitory. He may emphasize that the inflation surge the economy is experiencing on a year-over-year basis is the result of the huge recovery we are seeing relative to the massive decline in the economy a year ago. He may also mention that inflation will dissipate later in the year when compared to longer-term inflationary trends.

“We believe [Powell] will reiterate that now is not the time to be discussing an exit strategy for monetary accommodation considering significant uncertainty,” Nomura economist Lewis Alexander wrote in a note Friday. “Moreover, he will likely seek to downplay any concerns over inflation given upcoming base effects in Q2, the relatively weak December and January employment reports will offer Powell an opportunity to highlight the significant progress the labor market still needs to make before approaching ‘full employment.’”

Finally, “Powell may also use his testimony to reiterate his call for additional fiscal support from Congress to augment the support offered through the Fed’s policies,” according to Emily McCormick from Yahoo Finance.

During his press conference following January’s Federal Open Market Committee (FOMC) meeting, he emphasized fiscal support, calling it, “absolutely essential” to the economic recovery. Although Powell didn’t specifically mention President Joe Biden’s $1.9 trillion stimulus package, the size of that coronavirus relief bill would work well with the FOMC’s current monetary policy strategy.

For a look at all of today’s economic events, check out our economic calendar.

Price of Gold Fundamental Daily Forecast – Pressured by Upside Spike in 10-Year Treasury Yields

Gold futures finished lower on Friday as the U.S. Dollar firmed, weakening foreign demand for the dollar-denominated asset. Despite the setback, gold is being supported over the short-run by expectations for a $1.9 trillion U.S. coronavirus relief package, given its status as a hedge against inflation. Gold is being underpinned over the long-run by expectations for a weaker U.S. Dollar and real yields remaining low or negative.

On Friday, April Comex gold settled at $1823.20, down $3.60 or -0.20%.

US Dollar Rallies as Risk Appetite Ebbs

The U.S. Dollar moved higher against a basket of major currencies on Friday after several days of losses earlier in the week, as risk appetite soured with stocks and some commodity prices lower, while investors also consolidated gains made on other currencies ahead of a long weekend in the United States. U.S. Financial markets are closed on Monday for Presidents’ Day.

The greenback rose against the Euro but lost ground against the British Pound. The U.S. currency also rose versus the higher risk Australian, New Zealand and Canadian Dollars.

Weaker-than-expected weekly U.S. jobless claims data on Thursday kept a lid on the U.S. Dollar as it added to concerns the recent run-up in the greenback was too much, too fast, as speculators bet on a speedier rebound in the U.S. economy.

Perhaps underpinning the greenback was the divergence amongst traders over how U.S. President Joe Biden’s planned $1.9 billion fiscal stimulus package will affect the dollar. Some see it as bolstering the currency as it should speed a U.S. recovery relative to other countries, while others reckon it would feed a global reflation narrative that should lift riskier assets at the dollar’s expense. Setting up gold for a stronger rally.

Yields Highest Since March on Profit-Taking, Inflations Expectations Hit Six-Year High

Benchmark U.S. Treasury yields rose to their highest levels since March on Friday as investors closed positions ahead of a long U.S. weekend, while inflation expectations edged up to a six-year high.

Yields have largely held in a range as investors wait on a new catalyst to send yields substantially higher, with U.S. fiscal spending seen as the next major focus.

“Our base case view is for a $1 trillion package, but I think market expectations are gravitating towards something much largest,” said Zachary Griffiths, a macro strategist at Wells Fargo in Charlotte.

Finally, inflation expectations rose as high as 2.23% on Friday, the highest since 2014. That means that investors are now pricing in average annual inflation of 2.23% for the next 10 years.

For a look at all of today’s economic events, check out our economic calendar.

Fed’s Mester, Bullard Banking on Vaccine Rollout to Pull Economy Higher in Second Half of Year

Late last month at its monetary policy meeting, U.S. Federal Reserve officials agreed to keep supporting the economy by leaving interest rates near zero and to continue purchasing $120 billion in bonds.

With one week already gone in February, some investors consider the event old news and are already looking forward to the central bank’s March 16-17.

Fed members Mester and Bullard both see the need for short-term support to guide the economy through the pandemic, but they are also placing a lot of confidence in the vaccine rollout to pull the economy higher in the second half of the year.

Fed’s Mester Says More Fiscal Help May Be Needed in Short Term

While easy monetary policy can support the U.S. economy in the long-term, more fiscal help may be needed in the short-term to carry the economy through the pandemic, Cleveland Federal Reserve Bank President Loretta Mester said last Wednesday and Reuters reported.

Mester reiterated her view that monetary policy is “in a good spot.”

“Fiscal policy is the tool that you need to really direct…relief to get through this period,” Mester said during a virtual discussion with former Fed presidents organized by the Council of Economic Education.

The Fed official repeated her view that the economic activity could pick up in the second half of the year if most Americans are vaccinated against the coronavirus by the third quarter.

Mester said she is not concerned that the Fed could be late to responding to higher inflation because the relationship between the labor market and inflation is weaker than it has been in the past.

“There’s a lot of structural pressures that keep inflation down,” Mester said. “My concern now is that we can get to the place where we’re post vaccine.”

Mester also added the moment at which policymakers might start to withdraw its bond purchasing support and start to raise interest rates would be apparent to investors because the economy will be in a stronger place.

“We want to avoid a taper tantrum,” Mester said. “It’s going to be based on what’s the outcome in the economy. That’s transparent to everyone.

Fed’s Bullard Sees ‘Very Strong’ US Economic Growth as Pandemic Eases in 2021

The coronavirus pandemic should ease over the first half of the year and give way to “very strong” U.S economic growth during 2021, St. Louis Fed President James Bullard said last week and Reuters reported.

“The health crisis will wane in the months ahead” as more people are vaccinated, Bullard said. As it does, families will be able to tap an “exceptionally high” level of savings and financial resources in hand after a year in which government programs pumped trillions of dollars into the economy.

“Monetary and fiscal policies have been especially aggressive, and the associated macroeconomic outcomes have been considerably better than expected,” Bullard said in remarks prepared for delivery at the CFA Society of St. Louis.

Bullard’s bullish outlook suggests the U.S. unemployment rate could fall from the current 6.7% to as low as 4.8% “in the months ahead.” That is higher than the 3.5% seen before the pandemic, but less, Bullard noted, than the median of 5.6% in the period after World War II.

Bullard did not condition his estimates on any further government spending. Congress is currently debating a $1.9 trillion relief proposal from the Biden administration, which some argue could speed hiring even further.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Move Higher As Unemployment Rate Declines To 6.3%

Stocks Set To Finish The Week On A Strong Note

The U.S. has just released Non Farm Payrolls and Unemployment Rate reports for January.

Non Farm Payrolls report indicated that the economy added 49,000 jobs compared to analyst consensus of 50,000. Meanwhile, Unemployment Rate declined from 6.7% in December to 6.3% in January.

On Wednesday, ADP Employment Change report indicated that private businesses hired 174,000 workers in January. On Thursday, the Initial Jobless Claims report showed that the number of Americans who filed for unemployment benefits in a week decreased from 812,000 to 779,000.

All recent employment reports highlighted the recovery in the job market which is positive for the market. S&P 500 futures are gaining ground in premarket trading, and stocks look ready to test new highs.

Oil Hits New Highs

WTI oil continues to move higher and is currently trying to settle above the $57 level. Meanwhile, Brent oil has recently made an attempt to get to the test of the psychologically important $60 level, highlighting the current bullish mood in the oil market.

Oil traders managed to shrug off worries about problems with mass vaccination in Europe and focused on Saudi Arabia’s production cuts and the recent inventory data which indicated that crude inventories continued to decline.

If WTI oil manages to stay above the $55 level in the upcoming trading sessions, investors’ money will likely flow into commodity-related stocks, and the current upside move will continue.

Rising Treasury Yields Provide Support To U.S. Dollar

The yield of 10-year Treasuries has recently increased to 1.17% and is close to yearly highs as investors prepare for the upcoming major stimulus package.

U.S. Senate has recently passed a budget plan which will allow Democrats to get the package through the Congress without Republican support.

Rising yields have clearly provided significant support to the American currency in recent trading sessions. At the same time, they put material pressure on gold and silver which are sensitive to changes in yields.

For a look at all of today’s economic events, check out our economic calendar.

Employment Picture May Have Improved, but Much Depends on Struggling Hospitality and Leisure Sector

Today’s U.S. jobs report for January is important because it will show whether the economy is picking up strength from December’s dismal performance. This data will be used by stock investors to gauge the strength of the economy looking out three to six months. It may be used by politicians in Washington to determine whether the economy needs a $1.9 trillion booster shot. It may sway the Fed as to when it should begin tapering its bond purchases. So needless to say, all eyes will be on the numbers when they are released at 13:30 GMT.

Non-Farm Payrolls Report Consensus Forecast

Economists expect 50,000 payrolls added last month, after a decline of 140,000 in December, according to Dow Jones. The unemployment rate is expected to stay at 6.7%.

Additionally, many economists say seasonal-adjustment factors could boost the headline payrolls number in January, making predictions for the month particularly tricky, according to the Wall Street Journal.

Seasonal adjustments take into account steep layoffs that typically occur after Christmas. And economists say there could be fewer job losses than usual this January because there were so many at the end of last year.

Friday’s report also includes annual benchmark revisions to employment, which economists expect could show slight changes to employment losses at the beginning of the pandemic.

The economy has regained about 12 million of the 22 million jobs that were lost in March and April at the onset of the pandemic and related business restrictions, the Wall Street Journal noted.

Potential Volatility Because of Variety of Forecasts

NatWest economists raised their negative forecast to expectations for a gain of 300,000.

“We’re forecasting [an increase of] 200,000. It shows some improvement certainly relative to December, when there was a contraction,” said Michelle Meyer, head of U.S. economics at Bank of America Global Research.

“The swing factor should be leisure and hospitality because that’s where you had the biggest weakening in the December report,” she said.

Other economists are less optimistic on the job gains last month.

Michael Gapen, chief U.S. economist at Barclay’s, said he expects a negative 100,000 payrolls.

The number could be better, he said. However, Gapen does not see as much rebound in leisure and hospitality after the big December decline.

“I think the consensus says it’s a one-off,” he said. “We were kind of thinking there would be more persistence to the weakness in leisure and hospitality.”

But economists agree the goods part of the economy should continue to gain, with manufacturing potentially adding jobs.

“I suspect labor market momentum will pick up in coming months. I think the overall message from January is going to be no real incremental improvement in the labor market in January,” said Gapen. “We’ve got 10 million more jobs to recover. Averaging 200,000 a month is not going to get that done. We need to do more than that.”

For a look at all of today’s economic events, check out our economic calendar.

Stocks Decline Ahead Of Fed Interest Rate Decision

All Eyes On The Fed

S&P 500 futures are down by about 1% in premarket trading as traders take some profits off the table ahead of Fed Interest Rate Decision.

The Fed is expected to leave the rate unchanged, and traders will focus on the central bank’s commentary. While the commentary is projected to be very dovish, the U.S. dollar is currently gaining ground against a broad basket of currencies amid increased demand for safe-haven assets. The U.S. government bonds also enjoy stronger demand, and the yield of 10-year Treasuries has declined to 1.02%.

While the Fed Interest Rate Decision is the main event of the day, traders are also worried about COVID-19 as new strains of the virus emerge. In addition to the British strain of the virus, the world will have to deal with Brazilian and South African variants which are also spreading fast.

Germany’s Business Confidence Declines, Putting Pressure On Markets

Today, Germany reported that Business Confidence declined from 92.2 in December to 90.1 in January while analysts expected that it would decrease to 91.8.

Germany’s Business Confidence has not been that low since July 2020, so the recent report highlights a rapid deterioration of business mood.

The rapid decline of Germany’s Business Confidence has put pressure on the world markets. The German economy is the strongest economy in the Euro Area, and its problems indicate that the European economy will likely have a very challenging first quarter. In turn, these challenges may have a negative impact on multinational companies whose stocks are traded in the U.S.

Durable Goods Orders Increased By 0.2% In December

The U.S. has just provided Durable Goods Orders report for December. Durable Goods Orders grew by 0.2% month-over-month while analysts expected that they would increase by 0.9%. Excluding transportation, Durable Goods Orders increased by 0.7%.

Durable Goods Orders were weaker than expected as the transportation segment remained under pressure from the second wave of the virus. The recent economic data is pointing to a slowdown of the U.S. economy, but another stimulus package may soon provide sufficient support in case Republicans and Democrats manage to reach a consensus deal.

For a look at all of today’s economic events, check out our economic calendar.

US Economy Anchored by Strong Factory, Housing Sectors While Labor Market Recovery Fades

Fresh U.S. economic data released on Thursday showed an economy slowly getting some traction, with slightly better-than-expected initial jobless claims, upbeat housing starts data, and a higher factory index for the mid-Atlantic region.

US Weekly Jobless Claims Decline Moderately

The number of Americans filing new applications for unemployment benefits decreased modestly last week as the COVID-19 pandemic tears through the nation, raising the risk that the economy shed jobs for a second straight month in January.

Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 900,000 for the week-ended January 16, the Labor Department said. Economists polled by Reuters had forecast 910,000 applications in the latest week.

Some of the elevation in claims reflects people re-applying for benefits following the government’s recent renewal of a $300 unemployment supplement until March 14 as part of the nearly $900 billion in additional fiscal stimulus.

Mid-Atlantic Manufacturing Rebounds in January:  Philadelphia Fed

A gauge of manufacturing activity in the U.S. Mid-Atlantic region rebounded in January to its highest level in eight months and the outlook is the brightest in more than a year and a half, the Federal Reserve Bank of Philadelphia said on Thursday.

The regional Fed bank’s business conditions index rose to 17.0 from an upwardly revised 2.4 in December. That easily topped expectations for a reading of 3.8 in January, according to a Reuters poll of economists.

The six-month outlook rose to 38.4, the highest since May 2018, from 34.8 last month. The new orders, employment and prices paid indexes all showed improvement.

US Housing Starts, Building Permits Accelerate

U.S. homebuilding and permits surged in December as historically low mortgage rates supported the housing market, but momentum could slow amid surging lumber prices and a shortage of labor.

Housing starts jumped 5.8% to a seasonally adjusted annual rate of 1.669 million units last month, the Commerce Department said on Thursday. Economists polled by Reuters had forecast starts would rise to a rate of 1.560 million units in December. Homebuilding increased 5.2% on a year-on-year basis. Starts totaled 1.380 million in 2020, up 7.0% from 2019.

Permits for future homebuilding accelerated 4.5% to a rate of 1.709 million units in December. Permits, which typically lead starts by one to two months, totaled 1.452 million last year, a 4.8% increase from 2019.

Single-family homebuilding, the largest share of the housing market, soared 12.0% to a seasonally adjusted annual rate of 1.338 million units. Single-family starts have increased for eight straight months.

Single-family building permits raced 7.8% to a rate of 1.226 million units in December. Homebuilding is being supported by lean inventories, especially for previously owned homes.

For a look at all of today’s economic events, check out our economic calendar.

Atlanta Fed’s Bostic Lays Groundwork for Earlier than Expected Rate Hike

Fed speakers have grabbed the headlines this week with some supporting the recent rise in Treasury yields to their highest levels since March 2020 and other making comments that weighed on yields. All of this is taking place ahead of Thursday’s speech by Federal Reserve Chairman Jerome Powell and the central bank’s first policy announcements of the year later in the month.

Why are we talking about Treasury yields now after nearly a year of ignoring their movement? Because with the rollout of the vaccine and brighter days ahead, the Federal Reserve and other major central banks will start addressing their exit strategies from policies that put rates at historically low levels while leading to a record amount of bond buying to prop up the economy.

Furthermore, the promise of more fiscal stimulus from the government is very likely to be inflationary and higher rates will be needed to prevent rapid price increases of basic goods and services.

Keep in mind that interest rates are the fuel that drive the financial markets, not the headlines, not the speculators and Treasurys are the instruments that set the tone in the global market place including the dollar, foreign currencies, gold and stocks. With rates moving since the first of the year, it is important to know what Treasury yields are doing every day before you pull the trigger on a trade.

The words of the Fed policymakers will tell us what is important to watch and react to, not the news headlines.

Atlanta Fed’s Bostic: U.S. Recovery Hinging on Vaccine, Virus Control

The U.S. recovery will not get up to full steam until vaccines are distributed widely enough to end the pandemic, Atlanta Federal Reserve President Raphael Bostic said last Monday and Reuters reported.

“At heart it is a public health crisis first. All the economic fallout has been a function of how we responded to the public health crisis,” Bostic said. “Until that gets settled the economy is going to play out in a slower way.”

Fed’s Bostic Sees Possible Interest Rate Hike as Soon as the Second Half of Next Year

Interest rates could rise sooner than forecast as the economy recovers more quickly than expected from the throes of the COVID-19 damage, Atlanta Federal Reserve President Raphael Bostic said Monday.

While most of his colleagues don’t see a rate hike coming through until at least 2023, Bostic said he thinks the emergency measures the Fed has taken to combat the pandemic can start to be rolled back within the next two years if not sooner.

“I do think there is some possibility that the economy could come back a bit stronger than some are expecting,” he said during a virtual Q&A session before the Atlanta Rotary Club. “If that happens, I’m prepared to support pulling back and recalibrating a bit of our accommodation and then considering moving the policy rate.”

“But I don’t see that happening in 2021. A whole lot would have to happen to get us there,” he added. “Then we’ll see into 2022. Maybe the second half of 2022 or even 2023 where that might be more in play.”

Bostic Has Three Data Points for Fed Roll Back of Policy Shifts

Those metrics include temporary versus permanent job losses, the health of small businesses, and consumer confidence. Overriding all three, though, will be the path of the virus and the success of the efforts to control it, he said.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Indexes Finish Mixed as Coronavirus Concerns Cap Risk Sentiment

The major Asia-Pacific stock indexes finished mixed on Wednesday as investors continued to monitor developments on the coronavirus front as the region tries to prevent an out of control spread. Meanwhile, political turmoil in the Washington had little bearing on the price action. Investors also kept an eye on the activity in the U.S. Treasury markets after the yield on the benchmark 10-year Treasury note briefly traded at 1.187%, its highest level since March.

In the cash market on Wednesday, Japan’s Nikkei 225 Index settled at 28456.59, up 292.25 or +1.04%. Hong Kong’s Hang Seng Index finished at 28235.60, down 41.15 or -0.15% and South Korea’s KOSPI Index closed at 3148.29, up 22.34 or +0.71%.

In China, the benchmark Shanghai Index settled at 3148.29, up 22.34 or +0.71% and the Australian S&P/ASX 200 Index finished at 6686.60, up 7.50 or +0.11%.

Renewed Coronavirus Concerns

The Japanese government is set to expand the state of emergency to more areas on Wednesday, according to local media reports.

Kyodo News reported that Japan’s Prime Minister Yoshihide Suga is set to extend the current state of emergency to another seven prefectures including Osaka and Aichi on Wednesday, as the country’s cumulative total of coronavirus cases exceeded 300,000.

The government informed an advisory board of the planned expansion, which is expected to be approved by a government task force later in the day.

In China, local authorities in regions near Beijing are stepping up restrictions on social activity as new coronavirus cases grow.

Washington Developments

Investors watched for developments from Washington, as U.S. Vice President Mike Pence said Tuesday night he will not remove President Trump from office. That came before the Democratic-held House approved a resolution urging Pence and the Cabinet to push Trump out of the White House after he allegedly incited last week’s riot on the Capitol.

Hong Kong Shares End Lower as Investors Pause After Recent Rallies

Hong Kong shares ended lower on Wednesday, with consumer shares leading the declines, as investors paused after a rally fueled by the south-bound bargain hunting from mainland investors.

In recent sessions, as U.S. investors dump shares in Chinese companies blacklisted by outgoing President Donald Trump, bargain hunters in China are taking the opposite side of that trade, wagering that a Joe Biden presidency will reverse the investment ban.

Bumper Jobs Data, US Stimulus Bets Push Australia Shares Higher

Australian shares settled higher on Wednesday as upbeat data pointed towards improving employment figures on the horizon, with energy stocks leading the charge on an upswing in oil prices.

Australian job vacancies in the country surged 23.4% to hit an all-time high in the November quarter, data showed, signaling the likelihood for stronger employment growth in the offing.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Move Higher On Stimulus Expectations

U.S. Congress Certifies Biden Win

S&P 500 futures are gaining ground in premarket trading as traders managed to shrug off concerns about yesterday’s unrest in Washington. The U.S. Congress promptly certified Joe Biden’s victory in presidential election.

U.S. President Donald Trump stated that “there will be an orderly transition on January 20th”, and markets focused on the consequences of Democrats’ victories in Senate elections.

Traders expect that Democrats will soon introduce another stimulus package which should provide additional support to the economy and the stock market. The yields on U.S. government bonds continued to rally as investors sold their holdings in anticipation of another avalanche of freshly-printed dollars.

Surprisingly, the U.S. dollar gained some upside momentum against a broad basket of currencies, putting pressure on safe-haven precious metals like gold and silver. It remains to be seen whether the U.S. dollar will continue to rebound as stimulus expectations will likely serve as a bearish catalyst for the American currency.

U.S. – China Tensions Continue To Increase

According to recent reports, U.S. may add China’s tech giants Alibaba and Tencent to a blacklist, banning American investments in these companies. On Tuesday, the U.S. ordered a ban on transactions with eight Chinese apps.

In addition, Secretary of State Mike Pompeo stated that the U.S. may introduce new sanctions related to the recent arrests in Hong Kong.

The new escalation in U.S. – China tensions did not get much attention as traders watched the turmoil in Washington, but it may have longer-term implications, especially in case the U.S. bans Chinese tech giants from U.S. markets. At this point, the markets ignore the risks of another round of trade war between the world’s biggest economies, and stocks look ready to move to new highs.

Initial Jobless Claims Remain Unchanged At 787,000

The U.S. has just provided Initial Jobless Claims and Continuing Jobless Claims reports.

The Initial Jobless Claims report indicated that 787,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 800,000. Meanwhile, Continuing Jobless Claims declined from 5.22 million to 5.07 million.

These reports look good in comparison with yesterday’s ADP Employment Change report which showed that private businesses fired 123,000 workers in December. However, traders will wait for the Non Farm Payrolls report which will be published on Friday to come to final conclusions about the current state of the job market.

For a look at all of today’s economic events, check out our economic calendar.

Among Threats of Pandemic and Recession, Fed Already Discussing How to Tweak Economic Support

Ahead of the release of the minutes of the Federal Reserve’s December 15-16 monetary policy meeting on Wednesday, investors were hoping the minutes would detail what drove its decision to leave its monthly bond purchases unchanged. The news rattled investors at the time because most thought the central bank should have expanded the program to better support the economy through the coronavirus pandemic.

Investors were also hoping the minutes of that meeting would detail just what drove that decision and how the Fed is factoring the promise of a coronavirus vaccine into its plans. Of greatest interest was any insight those minutes offer into what it would take for central bankers to shift monetary policy in coming months if widespread immunization triggers a stronger economic rebound.

Judging from the response in the markets to the release of the minutes at 19:00 GMT on Wednesday, it looks as if the Fed sufficiently responded to those issues.

Fed Already Discussing Next Phase

Even before the minutes were released, policymakers already had begun sketching out the next phase of their debate as discussions likely hinged on how successful the country is in delivering coronavirus shots to its 330 million residents.

“The faster we get that under control the more robust this recovery is going to look,” Atlanta Federal Reserve President Raphael Bostic said in an interview with Reuters this week. “We just have to ride out this time, continue to follow public health recommendations and try to minimize the spread,” while the vaccine is distributed.

Bostic said he thought it is possible that by late spring or summer, businesses that have kept off line and people that have been kept inside because of the pandemic may resume “more normal types of interaction…the middle part of the year will be quite strong.”

Fed Minutes Highlights

The Federal Reserve was nearly unanimous in its decision last month to leave its bond-buying program unchanged, but left a wide berth for officials to decide in the future if and when changes should be made, according to minutes of the U.S. central bank’s December policy meeting.

“All participants” agreed the Fed should commit to leaving the program in place until there was “substantial further progress” towards its economic goals, and “nearly all” favored keeping the current mix of assets purchased intact rather than focusing, for example, on longer-term Treasury bonds as some analysts had advocated, said the minutes, which were released on Wednesday.

But in terms of how to judge when “substantial further progress” had been achieved, “participants commented that this judgement would be broad, qualitative, and not based on specific numerical criteria or thresholds.”

Distribution of a coronavirus vaccine, Fed officials said in the minutes, was also an “upside risk.”

For a look at all of today’s economic events, check out our economic calendar.

It’s Risk On after President Trump Signs Pandemic Aid and Spending Bill

A rally in the U.S. stock index futures and gold, and a weaker U.S. Dollar and 10-year Treasury Notes indicate that Monday is going to be a “risk-on” session after U.S. President Donald Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a federal government shutdown in a crisis of his own making.

At 02:48 GMT, the benchmark March E-mini S&P 500 Index is up 0.53% and February Comex gold is up 1.01%. The March U.S. Dollar Index is down by 0.16% and the March Ten-Year U.S. Treasury Note is off by 0.08%.

Reuters is reporting that Trump, who leaves office on January 20 after losing November’s election to President-elect Joe Biden, backed down from his threat to block the bill, which was approved by Congress last week, after he came under intense pressure from lawmakers on both sides.

The Republican president, who golfed on Sunday and remained out of public view even as the potential government crisis loomed, had demanded that Congress change the bill to increase the size of stimulus checks for struggling Americans to $2,000 from $600.

It was not immediately clear why Trump changed his mind as his resistance to the massive legislative package promised a chaotic final stretch of his presidency, according to Reuters.

White House officials have been tight-lipped about Trump’s thinking but a source familiar with the situation said some advisers had urged him to relent because they did not see the point of refusing.

“Good news on COVID Relief Bill. Information to follow!” Trump said in a cryptic message on Twitter earlier on Sunday evening But he offered no explanation.

Global Markets Like the News

Global share prices ticked up in response to the news that Trump had passed the stimulus plan and backed away from a possible government shutdown. Japan Nikkei Index gained around 0.4%, and spot gold prices rose nearly 1%.

“It is positive for markets that we no longer have a chaos over stimulus, considering there was a chance of a partial government shutdown,” said Masahiro Ichikawa, chief strategist at Sumimoto Mitsui DS Asset Management.

Democrats Sided With Trump, but Not His Method

Democratic-controlled House of Representatives planned to vote on Monday to increase coronavirus relief checks to individuals from $600 to $2,000, and said the Senate “will start the process” to approve higher payments.

U.S. Senate Majority Leader Mitch McConnell, a fellow Republican, said “I thank the President for signing this relief into law” but made no mention of any plans for a Senate vote on higher relief payments.

Many economists also agreed the financial aid in the bill should be higher to get the economy moving again but say that immediate support for Americans hit by coronavirus lockdowns is still urgently needed.

However, this comment opens the door for an even larger fiscal stimulus package once President-elect Joe Biden takes office on January 20.

For a look at all of today’s economic events, check out our economic calendar.

Muted Market Reaction as Fed Vows to Maintain Bond-Buying Until ‘Substantial Progress’ in Recovery

In its final meeting of the year, the U.S. Federal Reserve made a key adjustment to its efforts to support the economy, while upgrading its look for growth ahead. In a widely expected move, central bank policymakers held their benchmark interest rates near zero following the conclusion of its two-day meeting Wednesday.

Fed Commits to Keep Buying Bonds

The Fed said it would continue to buy at least $120 billion of bonds each month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals,” the post-meeting statement said.

“These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses,” the Federal Open Market Committee added in a statement that gained unanimous approval.

The FOMC did not, however, say it would extend the duration of those purchases.

Fed Tweaks Economic Outlook in Some Places

In addition to changing the language around the bond-buying program, Fed officials elevated their outlook on the economy since the last forecast in September.

The median expectation for gross domestic product in 2020 is now a decline of 2.4%, compared to the negative-3.7% in September. The outlook for 2021 is now at 4.2% compared to 4 previously and 3.2% in 2022 against 3%.

The outlook from there was reduced just slightly, to 2.4% from 2.5% in 2023 and 1.8% from 1.9% over the long run.

The committee also offered a considerably more optimistic outlook on unemployment. In 2020, the end-year rate is now projected to be its current 6.7%, from September’s projected 7.6%. In 2021, the median projection is for 5%, from 5.5%, while the two subsequent years are 4.2% (4.6% previously) and 3.7% (4%).

Officials still expect to be shy of the Fed’s 2% inflation objective until 2023, though 2020 and the next two years saw 0.1 percentage point increases to the outlook to 1.4%, 1.8% and 1.9% respectively.

Fed:  Economic Activity to Remain “Well Below” Pre-Pandemic Level

The Fed still sees economic activity recovering but “well below” the pre-pandemic levels. Overall, the committee expects the pandemic will “continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”

Market Reaction

The March 10-Year Treasury Notes whipsawed after the Fed announcements, but interest rates ticked higher. Gold futures dipped. The U.S. Dollar hit a new intraday high and the benchmark S&P 500 Index edged lower from its intraday high.

Overall, the moves were muted and were not as volatile as predicted in pre-announcement analysis.

Fed Chair Jerome Powell will now discuss the policy decision in a news conference Wednesday afternoon.

For a look at all of today’s economic events, check out our economic calendar.

Focus Shifts to US Non-Farm Payrolls, Stimulus Deal and Pfizer’s Vaccine Snag

Preliminary reports indicate that job gains in November are expected to be weaker than in October, reflecting the impact of coronavirus-related shutdowns by states and local governments due to the record surge in COVID-19. The fear is this trend could continue until a successful vaccine is given to the masses. Meanwhile, there is added uncertainty about this report because of Wednesday’s bleak outlook for private sector jobs and Thursday’s more upbeat weekly initial claims data from the Labor Department.

Some Analysts Warning of Rise in Unemployment Rate

Economists expect a consensus of 440,000 nonfarm payrolls were added in November, and the unemployment rate fell to 6.7% from 6.9%, according to Dow Jones. The total number of payrolls is likely to again be impacted by a sizeable drop in government jobs, due to layoffs of census workers by the federal government and cost cutting at the state and local level.

One worry for economists is the uncertainty over when employers actually stopped hiring in November because of the staggered nature and strength of the newly imposed restrictions.

“What we don’t know is when restrictions started to bite,” said Michael Gapen, chief U.S. economist at Bank of America. “They started to go in around the middle of the month,” said Gapen of the latest round of restrictions. “We think risks to our forecast are to the downside.”

Gapen expects 550,000 payrolls were added in total, but Bank of America economists expect 150,000 payrolls were added in November, adding to the uncertainty of a jobs report that could also show a rise in the unemployment rate, not a fall, as the consensus has predicted.

Jefferies economists also expect the unemployment rate could rise in November. “Frankly, it is hard to envision a particularly strong report coming out on Friday,” they wrote. They forecast 340,000 payrolls were added in November.

US Policymakers Resume Talks as Congress Rushes to Strike a COVID Stimulus Deal

House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell spoke Thursday for the first time since at least the 2020 election as Congress scrambles to strike a coronavirus stimulus deal and prevent a government shutdown.

The congressional leaders discussed their “shared commitment to completing an omnibus [spending bill] and COVID relief as soon as possible,” Pelosi spokesman Drew Hammill said in a tweet. They have signaled they want to resolve both thorny issues by December 11, the last day of government funding.

“Yeah, well we had a good conversation,” McConnell told reporters of the discussion. “I think we’re both interested in getting an outcome, both on the omnibus and on a coronavirus package.”

Pfizer Supply Chain Challenges Let to Slashing COVID-19 Vaccine Production Target – WSJ

Challenges in Pfizer Inc’s supply chain for its COVID-19 vaccine played a role in its decision to slash its 2020 production target, the Wall Street Journal reported on Thursday.

Pfizer has said in recent weeks that it anticipates producing 50 million doses of its COVID-19 vaccine this year. That is down from an earlier target of 100 million doses. Pfizer’s vaccine relies on a two dose regimen, meaning 50 million doses is enough to inoculate 25 million people.

A company spokesman told the Journal “scaling up the raw material supply chain took longer than expected.” She also cited later-than-expected results from Pfizer’s clinical trial as a reason for the company’s reduced expectations for vaccine production this year, the Journal reported.

The Journal reported that an unnamed person directly involved in the development of the Pfizer vaccine said “some early batches of the raw materials failed to meet the standard,” which caused production delays.

For a look at all of today’s economic events, check out our economic calendar.