While near-term headwinds from the pandemic and lack of additional fiscal relief continue to present downside risks to the recovery, we are increasingly optimistic about the economic outlook for next year. We continue to believe the trajectory of economic growth hinges on the course of the pandemic, the timing and amount of additional fiscal relief, and the timeline for a vaccine. Yesterday, Pfizer announced that its COVID-19 vaccine maybe 90% effective, based on an early read of its late-stage clinical trial. While this is still preliminary data, Pfizer appears to be on track to apply for emergency-use approval of its vaccine later this month. While widespread distribution of a vaccine may still be several months away, the level of efficacy from Pfizer’s trial is encouraging and bodes well for other vaccines in development that are using similar technology. In our view, effective therapeutics and a vaccine will be essential to keep the economic recovery on track next year. In the meantime, we believe there will be support from President-elect Biden for additional fiscal relief, but the Senate will determine the size of any additional relief package. While the outcome remains uncertain, the prospect for a GOP-controlled Senate suggests that a smaller, more narrowly targeted relief package may be more likely. However, a runoff Senate election in Georgia may delay any relief package until the new year. Meanwhile, virus cases and hospitalization rates are surging in many parts of the US which is likely to dominate the headlines now that the Presidential election has passed. Though another national lockdown seems unlikely, in our view, regional or self-imposed restrictions may lead to a slowdown in economic activity over the coming months. We also believe the labor market is likely to remain challenged until there is widespread access to a vaccine. Overall, we anticipate the economy may experience some ups and downs over the next few months but with continued progress toward an effective vaccine we see a strong catalyst for growth on the horizon. Risk assets surged on the Pfizer vaccine news yesterday, and we believe financial market volatility may remain elevated through year-end.

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