Happy Monday (said nobody, ever). A few words from MNI
EXECUTIVE SUMMARY:
U.K. HEALTH CHIEF JAVID SAYS CAN'T RULE OUT SHUTTING SCHOOLS
OMICRON STUDY SHOWS TWO-DOSE VACCINE INDUCES FEWER ANTIBODIES
EUROPEAN GAS, POWER PRICES SURGE ON NORD STREAM 2 WORRIES
BELARUS'S LUKASHENKO REPEATS THREAT TO BLOCK GAS TRANSIT TO EUROPE
Fig. 1: European Energy Prices Resurgent
UK / COVID (BBG): U.K. Health Secretary Sajid Javid said there’s no certainty the government will be able to keep schools in England open, as the government battles to contain the spread of the omicron Covid-19 variant. “When it comes to our fight against the pandemic there are no guarantees,” Javid told LBC radio on Monday, as he detailed plans to offer all adults in England a booster vaccination by the end of December. “We are once again in a race between the vaccine and the virus.”His comments point to the balancing act facing ministers as they try to respond to a surge in infections, even as a growing number of politicians in the ruling Conservative Party are threatening to rebel against new restrictions.
COVID (BBG): Two doses of the Pfizer Inc. and AstraZeneca Plc. vaccines induced lower levels of antibodies against the omicron variant, increasing the risk of Covid infection, according to researchers from the University of Oxford.Blood samples collected from people vaccinated with a combination of the two different shots and tested against the new strain showed a substantial drop in neutralizing antibodies, a proxy for protection, the scientists said Monday in a paper.The results echo other findings released by the U.K. government last week emphasizing the need for booster shots, especially amid evidence of omicron’s ability to drive a tidal wave of infections. The country’s Health Security Agency said Friday the basic course of shots from Astra and Pfizer provided much lower defenses against symptomatic infection with omicron compared with the delta strain, while a booster lifted protection to 70% to 75%.
…FIXED INCOME: Gilts outperform as UK Covid-19 Alert Level raised
Core fixed income is on the front foot this morning as concerns surrounding Omicron dominate markets his morning.
Gilts are the outperformers on the day relative to Friday's close (but remain within Friday's range). News that the UK has upgraded its Covid Alert Level to Level 4 from Level 3, along with concerns about further governmental restrictions has been driving UK markets today. The short sterling strip is also outperforming Euribor and Eurodollar strips.
Bunds are also moving higher and have broken through Friday's highs while Treasuries have underperformed (but still edged higher) with the market still looking for the Fed to quicken the pace of tapering on Wednesday.
TY1 futures are up 0-2 today at 130-15 with 10y UST yields down -1.2bp at 1.473% and 2y yields up 0.8bp at 0.664%.
Bund futures are up 0.07 today at 174.31 with 10y Bund yields down -1.4bp at -0.363% and Schatz yields up 0.4bp at -0.712%.
Gilt futures are up 0.04 today at 127.36 with 10y yields down -2.4bp at 0.715% and 2y yields down -2.9bp at 0.390%.
And an economic look ahead over the short-run