California ended its state-wide lockdown and replaced it by a more flexible county-by-county plan as new infections slowed. The Brazilian variant was found in Minnesota and 300 cases of the British variant were found in 24 different states. Cumulative vaccination (first dose) now stands at 7.1% of the total US population (versus 11.3% in the UK, and 2.4% in Germany). In the UK, the government pushed back the end of its “national lockdown” for schools until March, most shops until April, and pubs and restaurants until May. In the vaccine distribution front, there are now issues between the UK and the European Union regarding sharing doses of the vaccine. AstraZeneca announced that 40m doses will be supplied to the European Union by the end of March which is only half what the company had originally aimed for. Johnson and Johnson published the results of its vaccine candidate Phase-3 trial with a 66% effectiveness overall in preventing moderate to severe Covid-19 and 85% effectiveness in preventing severe disease. The single-dose vaccine candidate is estimated to remain stable for two years at -20°C (-4°F), at least three months of which can be at temperatures of 2-8°C (36°F–46°F). Also Novavax published Phase-3 results and said its UK trial produced efficacy of 89.3% but that number fell to only 60% in South Africa. Moderna and Pfizer both said that their vaccines are also less effective against the South Africa strain.
On Wednesday, the Federal Reserve held its FOMC (Federal Open Market Committee) meeting and the corresponding Press conference by Fed Chairman Jerome Powell. The Fed left its policy parameters unchanged as expected with the Fed funds rate in the 0%-0.25% range and the monthly purchase of debt at $120bn. Economic activity was described as having "moderated in recent months", and "progress on vaccinations" explicitly cited as key to economic recovery. Jerome Powell emphasized that tapering talk is “premature”.
US economic data
According to the first estimate of GDP, the US economy grew at an annual rate of 4.0% in Q4 20—down from 7.4% in the previous quarter, leaving US GDP down 3.5% in 2020 year over year. The paltry 0.2% increase in new orders in December (the smallest monthly increase since August) was another sign of a certain loss of momentum in the US economy.
Global economic data
The International Monetary Fund upgraded its forecast for global growth this year to 5.5%, up from its previous forecast of 5.2%. The IMF believes that by 2022 China and the US will have recovered most of the growth missed on account of the coronavirus, while Europe and emerging markets will lag. In Europe, German GDP declined by a smaller-than-expected 5.0% in 2020, better than France, where GDP fell 8.3%. Q4 figures for France, Germany and Spain were better than forecast. German headline HICP inflation rose to 1.6% y-o-y from -0.7% y-o-y in December. Several technical factors contributed to this pick-up, notably the reversal of the temporary German VAT cut and the introduction of a carbon tax.