COVID-19 vaccine and interest rates
In this episode we will discuss:
- The anticipation of a radical shift in the vaccine effort over the next two months as we transition from limited supply and concerns over having enough vaccine to a situation where we will have plenty of vaccine.
- The belief that as the vaccine become readily available, we will start to see that the much-desired return to normal will likely happen sometime in 2021.
- Recent rising interest rates on U.S. Treasuries have had some negative impact on interest rate-sensitive fixed income and also, interestingly, technology stocks.
- We believe that interest rates are also “returning to normal” and are seeking a level that is closer to where they were at the end of 2019, prior to the COVID-19 dislocation.
- This normalization may limit returns for fixed income in 2021, but, unless interest rates proceed past the normalization point, we do not see that it should have an extended effect on equity valuations.