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Volatile markets follow elections and vaccine announcement

Interest rate markets were volatile during this holiday-shortened post-election week, with the long end of the curve adding as much as 15 bps before giving back some of those gains as the week ended. Nevertheless, longer term yields ended the week higher with the 10-year note adding 7 bps and the 5-year adding four bps.

The gains were triggered both by the election results (as a Democratic administration is likely to favor a larger stimulus package) and the announcement that Pfizer's Covid vaccine was 90% effective in a trial involving tends of thousands of volunteers. As Covid infections are now dramatically rising (topping 10.5 million in the U.S. following an increase of 150k on Thursday), the news came as a welcome respite from the resumption of efforts to contain the virus' spread. The state of New York reimposed a restaurant curfew as Covid-related hospitalizations rose to a record and California's positivity rate climbed to a two-month high.

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