COVID-19 resurgences appear to be the primary driver of moves across many markets this year. Until the COVID-19 case count gets back under control, the yen may strengthen, the UK yield curve may flatten, and defensive lockdown-era leaders in the stock market may continue to outperform, according to Jeffrey Kleintop, Managing Director and Chief Global Investment Strategist at Charles Schwab.

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“In the UK, the bond yield curve (the spread between short and long-term interest rates) has moved inversely with the daily number of new cases in the UK, which are currently back on the rise.”

“In Japan, officials have declared a state of emergency in Tokyo and banned spectators at the Olympics in response to the latest rise in cases. We have seen moves in the yen align with new Japanese case counts.”

“Until the COVID-19 case count gets back under control, the yen may strengthen, the UK yield curve may flatten and defensive lockdown-era leaders in the stock market may continue to outperform.”