Investorerne lader sig ikke hyle ud af den voldsomme stigning i Omicron-tilfældene, og det skyldes ifølge Morgan Stanley, at Omicron ikke rammer så hårdt som som Beta-varianten, at der ikke sker så mange hospitalsindlæggelser i intensiv-afdelingerne, at der ikke sker så mange nedlukninger af erhvervsaktiviteterne – og at Omicron-bølgen ventes at toppe i denne måned. Investorerne venter åbenbart, at de kan klare sig gennem bølgen, og at der snart bliver en vis normalisering af pandemien. Der er lys for enden af tunnelen. Til gengæld begynder investorerne så at forberede sig på en stigende inflation og rentestigninger.
WHY ARE MARKETS UNFAZED BY OMICRON?
As we settle in for 2022, the early line of questioning from clients regards the impact of the Omicron variant of COVID 19. It’s been shattering records for infections globally and in the US, disrupting air travel as workers stay home sick. So why then are markets so far this week taking this in stride? Higher stock prices and bond yields reflect more economic confidence than concern. Is that confidence misplaced?
Not necessarily, in our view. That’s because while Omicron is clearly a serious public health risk, the data suggests it may not trigger the level of public policy response that sustainably crimps economic activity, such as indoor capacity restrictions on service establishments or stay at home orders.
Since the pandemic’s onset, such responses have largely been dictated by state and local governments, and as we pointed out in this podcast a month ago, in most cases where restrictions were tightened, rising COVID hospitalizations and lack of bed capacity were cited as the culprit. So far, the data suggests hospital capacity may not be a problem with Omicron.
Consider studies from the UK and South Africa, which have shown that Omicron is substantially less likely than the previously dominant Delta variant to land people in the hospital. This likelihood is lessened even more if an infected person was previously vaccinated. So even as case counts soar above those prior waves, it’s not surprising to see that measures of hospital capacity stress across the US are yet to exceed those of prior waves.
Further, as our colleagues in the Biotech Research team point out, the contagiousness of Omicron and subsequent protection against reinfection that the infected develop, at least for a time, has led to bigger but shorter infection waves in places like South Africa. This is why US government officials point out that Omicron could peak and fall quickly sometime this month.
In short, the wave and any attendant economic risk could be over quickly, and this may be why investors are looking through it. Hence, we expect markets will refocus on inflation and Fed policy as key drivers for 2022, continuing to push bond yields higher this year in line with our team’s forecast.
