Where Will The Next Lockdown Strike?

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by Tyler Durden
Friday, Nov 19, 2021 - 12:05 PM

This morning traders woke up shocked by the news that Austria announced a nationwide lockdown from Monday after a recent dramatic spike in Covid cases, as well as mandatory jabs starting February. Meanwhile the German health minister announced that he couldn’t rule one out after restrictions were announced yesterday for the unvaccinated even though the outgoing German foreign minister subsequently talked down this possibility.

As Deutsche Bank's Jim Reid shows in his Chart of the Day, daily cases per million for a selection of large countries and regions plus interesting other countries are once again surging, especially those in eastern Europe that seem to be going through an aggressive wave.

That said, especially in the case of Austria, the spike in documented cases appears to be directly tied to a recent surge in tests almost as if the government wanted to show a jump in cases, similar to what happened over the summer.

As Reid notes, for most of the countries near the top, the spike in cases has occurred fairly rapidly over the last couple of weeks. The exception is the UK where cases have been high and steady since the summer as high vaccination rates plus high infection rates have seemingly provided some degree of herd immunity.

As in Austria, Reid points out that it is important to bear in mind that testing rates vary considerably (the UK does the most per person in the G7) and that can affect the relative rankings, but the overall trend higher is clear.

The news is hitting European markets hard this morning as fears mount that the virus and restrictions will spread across the continent again.

However according to the DB credit strategist, the curveball might be the US. As Deutsche Bank economist Robin Winkler has been pointing out, the vaccination rate in Austria (64%) is somewhat lower than the likes of Spain (79%), Italy (74%), France (69%), the UK (69%) and Germany (68%) but it is still higher than the US (58%).

So although all the headlines are in Europe at the moment, Reid asks whether the US be more vulnerable than many European countries over the course of the full winter? As he concludes, "recent history suggests the US have a higher bar for economic restrictions related to covid but it also has a lower vaccination rate than their European peers."