Markets have traded more volatile as a result of fears that the Covid-19 delta variant could jeopardize the economic recovery and thus the markets.

Now, a recent J.P. Morgan report concludes that the Delta variant should not have significant implications for the pandemic situation in developed markets (e.g., Europe and North America, which have strong vaccination advances) due to the level of population immunity and, therefore, market positioning should not be driven by this or any subsequent COVID-19 variant for which current vaccines are effective and we can focus on vaccines and reopening.

They analyzed the progression of new cases and deaths in the top 15 countries most affected by the Delta variant over the past month. Looking at the progression of cases (driven by Delta variant) and deaths, they found that in 10 of 15 countries cases declined, and in 13 of 15 countries deaths declined as Delta variant increased the proportion of new infections. In summary, the spread of the Delta variant has on average coincided with an improvement in the overall COVID-19 situation in the affected countries.

Analyzing the situation in countries where pandemic conditions deteriorated over the past month, such as the United Kingdom, cases increased by ~14,000 per day, which represents a significant increase; however, deaths increased by ~9 per day, which is 0.9% of the maximum mortality rate. This is consistent with findings that vaccines effectively prevent the worst outcomes in Delta variant infections.

And what about Chile? After a second prolonged wave, which lasted approximately four months, infection trends finally began to improve reflecting the country's successful vaccination campaign, which has seen the inoculation of 83% of the target population needed to achieve herd immunity. In addition, the country has already inoculated 54% of the total population with both doses.

In this context, over the past 3 weeks, the 7-day moving average of new cases has fallen by 45% and now stands at 3,977, a significant drop. Similarly, the 7-day moving average of positive tests over total tests has fallen to 7.7%, the lowest figure since late February.

With the country approaching its herd immunity threshold, as well as continued vaccination incentives such as the mobility pass, it is expected that these positive infection trends will continue in the short term with the uncertainty of the arrival of the delta variant, although initial data suggest that vaccines would be effective against this variant, which invites relative optimism.

15 countries most affected by delta variable, changes in cases/deaths in June (1= improvement / 0= no change / -1= deterioration); last column shows % fully vaccinated + 0.5 * % partially vaccinated.