Potential Vaccine Ignites Markets

November 9, 2020

Potential Vaccine Ignites Markets Photo

After a very busy and stressful week for the country and markets, this week starts with some positive news regarding a potential vaccine for COVID-19. The preliminary results increase the odds that more than one effective treatment will be approved and become more readily available during next year. Stocks soared to new highs after pushing toward all-time highs last week. Treasury yields also rose on the news to near Election Day highs. 

Over the next few months until Inauguration Day, I expect two key forces to drive markets. The first is the potential for an additional economic stimulus deal to be approved by Congress and signed by the president. If a deal gets done, it would be positive for stock prices and negative for bonds. I am currently skeptical about whether a deal will be reached, given differences in the proposed size and focus areas. The second key driver will be the rising impact and resurgence of the coronavirus globally, offset by how quickly an effective vaccine or therapeutic treatment becomes available. 

Given these large and somewhat competing forces, I expect that volatility will remain elevated, with significant swings in market prices.

Tags: Coronavirus | Stimulus | Markets | yield | Volatility

< Go to Monday Morning O'Malley

This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications