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Futures Storm Higher After Smaller Than Expected RBA Rate Hike Boosts Speculation Global Tightening Is Ending

Futures Storm Higher After Smaller Than Expected RBA Rate Hike Boosts Speculation Global Tightening Is Ending

Yesterday’s furious rally, which…



Futures Storm Higher After Smaller Than Expected RBA Rate Hike Boosts Speculation Global Tightening Is Ending

Yesterday's furious rally, which following a miserable September and Q3, was the best start to a quarter since 2009 and the best start of a Q4 since 2002 according to Bespoke ...

... extended on Tuesday with S&P futures rising as much as 1.9% amid growing bets that we have seen the peak of the Fed's hawkishness, sentiment which was boosted after the RBA unexpectedly hiked its Cash Rate Target by only 25bps to 2.60%, below the market's 50bps expectation (having been the first central bank to warn that a pivot is coming a month ago), and sending the AUD and local bond yields tumbling while Australian stocks soared the most in two years! The sudden dovishness reverberated around the world, hammering the dollar for a second day, propelling European higher for the best day since June, sending the two-year Treasury yield plunging below the 4% mark and sending 10Y yields as low at 3.56%, almost half a percent below the 4% reached last Friday.  Oil advanced on expectations the OPEC+ alliance will deliver a substantial supply cut.

In premarket trading, major US technology and internet stocks were higher in premarket trading, set to extend their gains for a second straight session. Tesla (TSLA US) joined in on the action, gaining 3% after Cathie Wood bought the carmaker’s dip on Monday. Bank stocks also rallied, putting them on track to gain for a second straight day. Meanwhile, Saudi Arabia appointed BNP Paribas, Citigroup, Goldman Sachs, JPMorgan and Standard Chartered as primary dealers in the government’s local debt instruments. In corporate news, most asset managers that promised to eliminate their financed emissions by 2050 have failed to submit plausible plans toward achieving that goal, according to environmental think tank Universal Owner. here are other notable premarket movers:

  • Rivian (RIVN US) rose 9% in premarket trading after the automaker reported a boost in production and reaffirmed its annual goal to build 25,000 electric vehicles.
  • Bed Bath and Beyond’s (BBBY US) shares rise as much as 3.3% in premarket trading. WSJ reported late Monday that some of the home furnishings retailer’s bondholders are working with Perella Weinberg Partners ahead of debt talks expected to be held with the company.
  • Poshmark (POSH US) jumped as much as 14% in US premarket trading on Tuesday, after South Korea’s Naver agreed to buy the firm in a deal worth $1.2 billion.
  • Adeia (ADEA US) jumped as much as 150% in US premarket trading, before paring gain to 24%. The shares are set to extend Monday’s jump on the first day of trading following the completion of the spinoff of TiVo Parent Xperi.
  • Shares of cryptocurrency-exposed stocks including Marathon Digital (MARA US) and Coinbase (COIN US) rallied in premarket trading as Bitcoin climbs to breach the closely watched $20,000 level.

The surge started on Monday after investors saw the far weaker-than-estimated US ISM manufacturing data - and especially the biggest drop in the employment index since the covid crash - supporting a dovish tilt at the Fed after 3 percentage points of hikes began to tell on the economy. Money markets now see the Fed Funds Rate peaking below 4.5% by March. And as Bloomberg notes, echoing the above, "speculation is growing that the global wave of disruptive monetary tightening is nearing its end, especially after the Reserve Bank of Australia raised rates by half as much as expected."

“While the more rational approach outlined by the RBA does not bring forward rate cuts, it offers the possibility of stepping back from the more extreme hawkishness of recent weeks,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “That implies bull steepening in bond markets and should provide some support for equity markets if other central banks follow suit.”

As a result of the fresh burst of hope in peak hawkishness, money markets now signal the Fed will hike rates a further 125 basis points at most by March compared with as much as 165 basis points seen following the third three-quarter point increase last month. These pared expectations spurred a rally in Treasuries across the curve on Tuesday. The 10-year rate shed 6 basis points Tuesday, while the two-year yield slid 12 basis points to trade at 3.99%.

In Europe, the Stoxx 600 rallied as travel, technology and retail companies posted some of the biggest gains. Travel, tech and retailers are the strongest-performing sectors. UK domestic stocks outperformed as beaten-down sectors including retail and travel & leisure rebounded. The move, with the domestically-focused FTSE 250 up 2.4%, came as the pound extended gains against the dollar. Chancellor of the Exchequer Kwasi Kwarteng is due to bring forward the announcement of his medium-term fiscal plan. Here are the biggest European movers today:

  • European airlines advance, with British Airways owner IAG rising as much as 5.5% after getting an upgrade to buy from hold at Goodbody, while Ryanair gains as much as 5.9% after reporting Sept. load factor data.
  • The Stoxx 600 Tech Index rallied as much as 4.2%, the biggest intraday climb since mid-March. Chip stocks were among the biggest gainers, including ASML rising as much as +5.4%, ASM International +6.8%, STMicro +5.3% and Infineon +5.3%.
  • Vodafone shares gain as much as 3.3% and extend gains as Oddo BHF upgrades the stock to outperform from neutral, saying the telecom operator’s share price is still at a low, with three transactions being launched and more “on the way.”
  • Credit Suisse shares rise as much as 6.0%, recouping most of their losses amid a wider stock market rebound on Monday, after having fallen as much as 12% earlier in the day. The Swiss lender’s gauge of credit risk spiked to a record on Monday, crushing hopes of its CEO to calm markets on capital levels and liquidity.
  • HSBC shares rise as much as 3.9%, extending early trading gains, after Sky News reported the bank has instructed JPMorgan to sound out prospective buyers.
  • Greggs shares gain as much as 11%, among the top performers in the FTSE 250 Index, after the UK bakery chain said sales grew 14.6% in the third quarter. Jefferies said the update shows “impressive resilience.”
  • Private equity firm EQT fall as much 8.2%, the most since June, after Nasdaq Nordic updated its index methodology to divide shareholders into two groups of “strategic investors and non-strategic investors.”
  • Rheinmetall shares fall as much as 7.2% after a report that a contract announcement on a key defense program in Australia could be delayed until March.
  • M6 shares decline as much as 12% after Bertelsmann’s RTL Group said it will keep its stake in the French TV broadcaster due to “legal risks and uncertainties” around antitrust approval.
  • Drax shares suffered decline as much as 7.7%, their biggest intraday drop in nearly two months, after the BBC’s Panorama program said the UK power firm is cutting down “environmentally important” forests.

Earlier in the session, the MSCI Asia Pacific Index rallied 2.2%, poised for their biggest daily advance since March, after weak US manufacturing data trimmed bets on the Federal Reserve’s hawkishness and revived appetite for risk.  The MSCI Asia Pacific Index gained as much as 2.4% with all sectors rising. A regional tech sub-gauge jumped more than 3% after Treasury yields slipped and the dollar weakened. Taiwanese chip firms serving Chinese customers got a further boost from a report that the US plans to announce fresh curbs on semiconductor exports to China. Australia’s benchmark led gains in the region after the country’s central bank delivered a smaller-than-expected interest rate hike.

Japanese stocks also surged, with the benchmark Topix rising more than 3%, boosted by technology shares. even after North Korea fired a missile over the country for the first time since 2017. Liquidity in the region was relatively thin as China and Hong Kong markets were closed for a holiday. Despite the latest gains, caution remains over how sustainable any recovery in Asian shares may be. MSCI’s regional gauge is still down 27% this year, partly weighed by China’s strict Covid controls.  “Until we see more signs of inflation peaking out in the US, expect the Fed to stay aggressive, for the dollar to continue to climb and Asian stocks to remain under pressure,” said Manish Bhargava, fund manager at Straits Investment Holdings

Australian stocks soared the most in two years on RBA’s smaller hike: the S&P/ASX 200 index rose 3.8% to close at 6,699.30 after the RBA surprised investors by raising interest rates by a quarter percentage point, ending a streak of outsized increases. The benchmark notched its biggest gain since June 2020. All sectors climbed, with banks contributing the most to the gauge’s advance. In New Zealand, the S&P/NZX 50 index rose 1.2% to 11,090.03, ahead of the RBNZ’s policy decision on Wednesday. The central bank is poised to raise interest rates by half a percentage point for a fifth straight time, and some economists are tipping it will need to keep tightening well into next year.

Indian stocks posted their biggest advance in more than a month, tracking an extended rally in global equities on hopes of potential easing of hawkish monetary policies by central banks.  The S&P BSE Sensex rose 2.3% to 58,065.47 in Mumbai, while the NSE Nifty 50 Index advanced by an equal measure.  Shares of financial companies, automobile makers and consumer goods firms were among top gainers in India as the festive season began this week. Local markets will be closed Wednesday for the Dussehra festival. All of the 19 sector sub-indexes compiled by BSE Ltd. gained, led by metal and finance stocks. On the macroeconomic front, India’s trade deficit narrowed for a second straight month in September, mainly due to easing global commodity prices. However, a weakness in the local currency continued to put pressure on the south Asian economy. HDFC Bank and ICICI Bank contributed the most to the Sensex’s gain, increasing 2.8% and 2.3%, respectively. All but three of the 30 shares in the Sensex index advanced.

In FX, the dollar headed for the lowest level since Sept. 22, as the greenback traded weaker against most of its Group-of-10 peers with a rebounding British pound acting as the biggest drag. The UK’s withdrawal of a tax-cut plan soothed nerves about the government’s fiscal health, though doubts remained about the outlook for the currency. Scandinavian currencies led gains while the Aussie was the worst performer. The euro neared a two-week high versus the greenback.

  • The pound extended gains against the dollar amid broad-based greenback weakness, rising above $1.14 for the first time in two weeks. Gilts bull steepened with traders also trimming their pricing of BOE hikes.
  • The Aussie trimmed losses on the back of a weaker dollar. It earlier fell as much as 1% and the Australian 3-year yield briefly tanked as much as 58bps as the Reserve Bank raised the cash rate to 2.6%, less than the median of 2.85% expected by economists surveyed. Governor Philip Lowe reinforced his commitment to tightening even as he acted on signals last month of a slower pace of increase
  • An advance by the New Zealand dollar may be held back by the Aussie’s decline, with RBNZ set to raise interest rates by a half-point Wednesday, to 3.5%
  • The yen underperformed the greenback as the second half of Japan’s fiscal year begun. JGBs gained after a solid 10-year auction. Options traders reduce long-gamma exposure in the yen in the front-end given the threat of Japanese intervention in the currency market means dollar bullish calls are no longer in vogue

In rates, treasuries advanced led by the front end and temporarily sending the US 2-year yield below 4% for the first time since Sept. 21, as money markets continued to pare Fed hike wagers. Bunds and Italian bonds bull steepened as money markets continued to pare ECB tightening wagers. Treasuries extended Monday’s bull-steepening move with front-end yields richer by nearly 10bp on the day in early US session. Treasury yield richer by 8bp to 3bp across the curve with 2s10s, 5s30s spreads steeper by ~2bp and ~4bp on the day; 10-year is around 3.58% with gilts trading ~8bp richer in the sector. Gilts lead as BOE rate-hike premium fades further, and Australian front-end surged overnight after RBA surprised with a smaller rate hike than expected. US session features a busy Fed speaker slate.  Across front-end UK 2-year yields are richer by 25bp on the day while Aussie 2-year notes closed down more than 30bp after RBA hiked cash rates by 25bp vs 50bp expected. Fed-dated OIS contracts continue to shift to a more dovish policy path, with additional 112bp of hikes now expected over the next two policy meetings vs 115bp at Monday’s close.

In commodities, WTI broke above Monday’s range, adding 1.3% to near $84.94, Brent rose above $90. Spot gold rises roughly $9 to trade near $1,709/oz.

Bitcoin is bid and briefly reclaimed the USD 20k handle, though has since dipped marginally back beneath the figure.

To the day ahead now, and data releases include US factory orders and the JOLTS job openings for August, as well as the final August readings for durable goods orders and core capital goods orders. In the Euro Area, we’ll also get the August PPI reading. From central banks, we’ll hear from ECB President Lagarde, the ECB’s Centeno, as well as the Fed’s Williams, Mester, Jefferson and Daly.

Market Snapshot

  • S&P 500 futures up 1.4% to 3,743.25
  • STOXX Europe 600 up 2.1% to 399.04
  • MXAP up 2.2% to 141.85
  • MXAPJ up 1.8% to 458.20
  • Nikkei up 3.0% to 26,992.21
  • Topix up 3.2% to 1,906.89
  • Hang Seng Index down 0.8% to 17,079.51
  • Shanghai Composite down 0.6% to 3,024.39
  • Sensex up 2.1% to 58,006.25
  • Australia S&P/ASX 200 up 3.8% to 6,699.29
  • Kospi up 2.5% to 2,209.38
  • German 10Y yield little changed at 1.84%
  • Euro up 0.5% to $0.9871
  • Brent Futures up 0.7% to $89.51/bbl
  • Gold spot up 0.4% to $1,707.42
  • U.S. Dollar Index down 0.44% to 111.26

Top Overnight News from Bloomberg

  • EU internal market chief Thierry Breton and Paolo Gentiloni, the bloc’s economy czar, said the current situation requires solidarity among member states, including the issuance of joint- guaranteed debt similar to what was done during the Covid pandemic
  • UK Prime Minister Liz Truss said she’s yet to decide whether welfare payments in the UK should be increased in line with inflation, an issue that threatens to spark another bitter row with her disgruntled Conservative MPs
  • Britain’s bond market should comfortably absorb the extra £62 billion of debt announced after the government’s September mini-budget despite undergoing “‘a major repricing,” Reuters reported, citing UK Debt Management Office head Robert Stheeman
  • Global stock and bond bulls are hoping the market impact of Australia’s dovish rate surprise will stick as it offers their best chance at arguing the worldwide wave of disruptive hikes is closer to the end than the beginning
  • North Korea fired a missile over Japan for the first time in five years, further ratcheting up tensions over Kim Jong Un’s nuclear program and prompting a rare public safety warning to be issued by Tokyo

A more detailed look at global markets courtesy of Newqsuawk

Asia-Pac stocks notched firm gains as the region took impetus from the strong performance on Wall St where stocks rallied amid a decline in the dollar and yields, while equities were unfazed by North Korea's latest launch. ASX 200 gained at the open as the commodity-related sectors led the broad gains across the index after recent strength in oil and precious metals, while stocks were further boosted after the RBA opted for a smaller than expected rate increase of 25bps.  Nikkei 225 advanced closer to the 27k level after the latest Tokyo CPI data printed in line with expectations. KOSPI strengthened despite North Korea's missile launch which flew over Japan for the first time since 2017 and prompted Japan to issue a warning for residents to take shelter, before landing outside of Japan’s EEZ.

Top Asian News

  • China is demanding that foreign diplomats provide floor plans of Hong Kong missions, according to FT.
  • Taiwan is to open its border and lift quarantine rules in 10 days, according to the Ministry of Foreign Affairs.
  • RBA hiked the Cash Rate Target by 25bps to 2.60% (exp. 50bps hike). RBA stated that the Board is committed to returning inflation to the 2–3% range over time and expects to increase interest rates further over the period ahead. RBA added that today’s increase in interest rates will help achieve this goal and that the Cash Rate had been increased substantially in a short period of time, while the size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.
  • Japan Defends Appointing Premier’s Son as Senior Aide
  • What Adding India to Global Bond Indexes Would Mean: QuickTake
  • Naver Sinks 9% on Announcing $1.2 Billion Poshmark Deal
  • Samsung Woos US Chip Buyers With Tech Advances, Texas Focus

European bourses have commenced the session on the front foot as broader sentiment remains constructive largely in a  continuation of yesterday's recovery. Sectors are all in the green with Travel names outperforming amid Heathrow ending the passenger cap while defensively-biased names lag a touch given broader sentiment. Stateside performance is very in-fitting, ES +1.5%, ahead of Fed speak and after a constructive update from Foxconn. Foxconn (2317 TW) September sales +40.4% YY; Q3 revenue better than expected. Maintain FY22 guidance, as stated in August; Q4 outlook is cautiously positive. Need to closely monitor inflation, demand, COVID and supply chains in the period. September: strong revenue performance in smart consumer electronics products was the main driver of overall revenue; smart consumer electronics, cloud and networking products delivered strong double-digit growth. Apple (AAPL) iPhone exports from India doubling, according to Bloomberg, in a boon to the plan of Indian PM Modi; additionally, exports of India-made iPhones surpass USD 1bln in a five-month period, via ET Now citing sources.

Top European News

  • UK PM Truss said abolishing the 45p top rate of tax was a tiny part of the plan and had become an unnecessary distraction, according to The Telegraph.
  • German Finance Minister Lindner says they are open to joint steps on the international gas market, prepared to discuss measures to contain gas prices, EU power market needs to be reformed and joint purchases need to be considered.
  • EU Economy and Single Market Commissioners have called for joint EU borrowing to deal with the energy crisis.
  • EU Chiefs Eye Joint Debt as German Fiscal Force Worries Allies
  • Russia Sanctions Germany’s Operator of Katharina Gas Storage
  • Rheinmetall Drops on Report of Australian Defense Contract Delay
  • Vodafone-Three Merger Set to Be £14 Billion Test for Watchdogs
  • Tendam Brands Offering of Senior Secured 2028 Notes for EU300m
  • ECB’s de Cos Says Spanish Banks Must Be Cautious Amid Slowdown


  • Crude benchmarks are modestly bid this morning, taking the lead from broader sentiment and associated FX action.
  • Benchmarks are firmer by just shy of USD 1/bbl and towards the top-end of the sessions parameters and more broadly are well within the ranges of the last few days/weeks.
  • Precious and base metals have benefited from the pullback in the USD. Lifting spot gold back above USD 1700/oz to a session best USD 10/oz above the figure and bringing the 50-DMA into focus at USD 1723/oz
  • Saudi Aramco CEO says they maintain their market within Asia, despite demand from Europe; oil spare capacity is extremely low, market is focused on short-term economics, rather than long-term, via Reuters.
  • Trafigura Chief Economist says sees dated Brent oil benchmark price above USD 75bbl at the end of next year, via Reuters.
  • US Treasury Official Harris says Russian oil price cap will be high enough to maintain Russian incentive to continue producing; not yet been a decision on the price, via Reuters. December 5th sanctions will target Russian crude, then diesel and lastly lower value products such as Naphtha.

US Event Calendar

  • 10:00: Aug. Factory Orders, est. 0%, prior -1.0%
    • Factory Orders Ex Trans, est. 0.2%, prior -1.1%
  • 10:00: Aug. Durable Goods Orders, est. -0.2%, prior -0.2%
    • -Less Transportation, est. 0.2%, prior 0.2%
    • Cap Goods Orders Nondef Ex Air, prior 1.3%
    • Cap Goods Ship Nondef Ex Air, prior 0.3%
  • 10:00: Aug. JOLTs Job Openings, est. 11.1m, prior 11.2m

Central bank Speakers

  • 09:00: Fed’s Logan Gives Welcoming Remarks at Event on Technology
  • 09:00: Williams Gives Opening/Closing Remarks at Work Culture Event
  • 09:15: Fed’s Mester Speaks at Conference on Payment System
  • 11:45: Fed’s Jefferson Speaks at Conference
  • 13:00: Fed’s Daly Speaks to the Council on Foreign Relations

DB's Jim Reid concludes the overnight wrap

After an awful performance in September, Q3 and YTD - which we detailed in the performance review yesterday (link here) - if Q4 carries on like it did on the first day, then most things will be firmly in positive territory for FY 2022 by the end of December!!

Indeed, the S&P 500 (+2.59%) bounced back from its 22-month low alongside a sharp decline in global sovereign bond yields. There were multiple factors driving the rally, but the main one was growing speculation that central banks could soon pivot towards a more dovish stance, particularly after the market turmoil over the last couple of weeks. As you'll see below, the RBA move overnight will encourage more of that thought. That theory dominated early trading but was then given further support after the ISM manufacturing print came in below expectations, with surprise contractions in the employment and new orders components. And in turn, that led investors to significantly dial back their expectations for how much central bank tightening we’re likely to see over the months ahead. In fact, the rate priced in by Fed funds futures for end-2023 came down by a massive -18.3bps yesterday to 4.14%, and is now -38.2bps from the peak reached last Monday following the historic sell-off in DM sovereign bond markets.

We’ll have to wait and see whether that pivot actually ends up happening though, but sovereign bonds reacted accordingly, and yields on 10yr Treasuries fell by a sizable -19.0bps to 3.64%. Noticeably, that move lower was entirely driven by a fall in real yields, with inflation breakevens moving higher on the day, which is again a sign that investors are pricing in a much less aggressive reaction from the Fed. Indeed, by the close, the 10yr real Treasury yield was down -22.9bps, which was the biggest move lower since March 2020 when the global economy was reeling from the initial wave of the Covid-19 pandemic. So that just shows how much investors were reappraising things yesterday given how volatile markets have been these last couple of years. 10yr yields are another -2.58bps lower in Asia, trading at 3.61% as I type.

As mentioned at the top, the weak ISM manufacturing reading helped fuel the rally on the back of hopes that the Fed wouldn’t move as aggressively as feared, and the reaction in equities was evident after the release came through. In a sense, it’s the reverse of the “good news is bad news” phenomenon over recent weeks, whereby strong data releases were just seen by investors as giving more space for the Fed to keep hiking rates. But this time it was the other way round, with September’s print coming in at 50.9 (vs. 52.0 expected), which is the lowest reading for the index since May 2020 when the economy was still experiencing the effects of lockdowns. For the new orders component at 47.1 (vs. 50.5 expected), it was also the lowest since May 2020, and marked the 3rd time in 4 months that it’s been in contractionary territory. The only caveat to the slump in the employment index was that August was an outlier. The series had been below 50 for 3 months before last month in what has still been a hot labour market so it's possible the market read too much into the decline.

The data led the Atlanta Fed’s GDPNow model to revise its third quarter growth estimates down to 2.3% from 2.4%, but this is still indicative of a tight economy capable of generating inflation despite signs of softening data. Indeed, later in the day Vice Chair of the FOMC, New York Fed President Williams noted it may take years to get inflation back to target given the current supply and demand imbalance in the economy, and that the Fed still had “a way to go”, invoking the 4.6% fed funds dot for the end of 2023, specifically. Not exactly ‘pivot’ language from the core of the FOMC.

Over in Europe, expectations of a pivot from the ECB gathered steam as well, with the rate priced in for June 2023 coming down by -19.9bps on the day. As well as the weak economic data, the European moves were supported by the latest falls in natural gas prices, with futures coming down -10.00% to €170 per megawatt-hour. That’s their lowest level since late July, and speaks to growing hopes that the damage from the Russian gas cut-off won’t be quite as bad as feared this time a month ago. Against that backdrop, European yields fell significantly, with those on 10yr bunds (-19.3bps), OATs (-20.6bps) and BTPs (-27.2bps) all seeing sharp declines. That decline in gas prices helped inflation breakevens to move lower, and there was a significant milestone as the 10yr German breakeven (-10.3bps) closed below 2% yesterday for the first time since Russia’s invasion of Ukraine began.

For equities, the prospect of a dovish pivot was seen as unambiguously good news, which helped the major indices to rebound significantly from their weak performance over the last couple of weeks. The S&P 500 advanced +2.59%, in spite of a significant loss for Tesla (-8.61%) after their Q3 deliveries were below estimates. That led to a modest underperformance in the Nasdaq, which gained only +2.27%, still its best day since mid-August on the supportive rate rally. Over in Europe, the STOXX 600 was also up +0.77%, although there was significant focus on Credit Suisse (-0.93%) after their credit default swaps hit a record high in trading, moving above levels seen even during the GFC. However, the shares were down -11.56% at their lows for the day and the CDS ended +69bps higher on Bloomberg with traders seeing it +100bps wider at one point.

Here in the UK, there was a significant development just as we went to press yesterday, as the government reversed course on their proposal to abolish the top 45% rate of income tax. In economic terms, it’d only been a small component of their fiscal package that triggered the market turmoil, comprising around £2bn of the £45bn of tax cuts announced. But in political terms, it had been one of the most difficult points of contention, and there were serious questions about whether it would even pass the House of Commons given public opposition from some Conservative MPs. UK assets responded positively to the development, with sterling strengthening after the news came in to move higher for a 5th consecutive session. In fact, it also moved above its levels prior to the mini-budget for the first time, closing up +1.37% at $1.13. Those moves were echoed among gilts, which rallied in line with the broader global moves, with the 10yr yield down by -13.2bps to 3.94%. After gilt trading wrapped up for the day, the FT reported Chancellor Kwarteng is expected to expedite the government’s medium-term fiscal plan, bringing it forward later this month instead of the middle of November. For the government, however, there were no signs that their political difficulties were easing just yet, as a Savanta ComRes poll showed the opposition Labour Party with a 25-point lead over the Conservatives. That’s the biggest ever Labour lead that pollster has recorded, and echoes the 33-point lead in a YouGov poll last week.

Asian equity markets are following the overnight gains on Wall Street, shrugging off news that North Korea fired a missile over northern Japan for the first time in five years. The Nikkei (+2.38%) is trading sharply higher with the Kospi (+2.29%) also advancing on its return to trading after a holiday. Meanwhile, markets in China will remain shut this week for holidays with Hong Kong closed today. Elsewhere, the S&P/ASX 200 (+3.45%) is surging after the Reserve Bank of Australia (RBA) lifted its key interest rate by 25bps to 2.6%, instead of the 50bps expected by the consensus (more below). Stock futures across DMs are pointing to another rally with contracts tied to the S&P 500 (+0.79%), NASDAQ 100 (+0.93%) and DAX (+1.41%) all up strongly.

The RBA raised its official cash rate (OCR) for the sixth time in as many months but surprised the market by only hiking by 25bps. In a statement, Governor Phillip Lowe said that the board expects to increase interest rates further over the period ahead while acknowledging that the pace of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. Additionally, the RBA expects headline inflation to peak at 7.8% later this year.

The surprise decision sent the nation’s currency and bond yields tumbling as the Australian dollar reacted negatively to the move, dropping -0.8% to $0.6468 before managing to recover to trade at $0.6496 while 10yr yields (-19.7bps) moved sharply lower to 3.70%. Additionally, 3yr yields at one point dropped as much as -58bps intraday - the biggest such move since October 2008. It's around -35bps lower as I type.

Early morning data showed that the Tokyo core CPI rose +2.8% in September from a year earlier, surpassing the Bank of Japan’s 2% target for a fourth straight month and marking the biggest gain since 2014. It was in-line with consensus but suggests nationwide CPI could top 3% when released.

There wasn’t much in the way of other data yesterday, though we did get the final manufacturing PMI readings for September, which mostly painted a similar picture to the flash prints. In the Euro Area, the final PMI came in at a contractionary 48.4 (vs. flash 48.5), which was its lowest since June 2020. However, the US reading saw a modest upward revision to 52.0 (vs. flash 51.8).

To the day ahead now, and data releases include US factory orders and the JOLTS job openings for August, as well as the final August readings for durable goods orders and core capital goods orders. In the Euro Area, we’ll also get the August PPI reading. From central banks, we’ll hear from ECB President Lagarde, the ECB’s Centeno, as well as the Fed’s Williams, Mester, Jefferson and Daly.

Tyler Durden Tue, 10/04/2022 - 08:11

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FDA’s drug shortages leader wants companies to start reporting increases in demand

It is no secret that drug shortages have been prevalent in 2022. Several major drug products, such as amoxicillin and Adderall, have been in short supply…



It is no secret that drug shortages have been prevalent in 2022. Several major drug products, such as amoxicillin and Adderall, have been in short supply for several months and have led to members of Congress applying pressure on the FDA and HHS to resolve the situation.

Valerie Jensen

Speaking at a webinar hosted by the Alliance for a Stronger FDA, Valerie Jensen, the associate director of the FDA’s Drug Shortage Staff, noted both the rise in quality-related issues and increased demand for some products. She called on companies to report such demand increases, even though they are not currently required to do so.

During the Covid-19 pandemic, she said, the agency has seen new challenges mainly related to these increases in demand.

“During the pandemic as well, we had competition on manufacturing lines and that’s still occurring due to vaccine production and other Covid products,” Jensen said. “So, the same products are being made on those lines that are making the vaccines and Covid-related products, and then that creates a competition situation.”

Jensen added that an increase in demand for manufacturing commodities due to large-scale vaccine production is also leading to shortages. Items such as glass, filters and vial hoppers are in short supply. And now the increased demand is centered around the increase in drugs to counter respiratory illnesses.

She said the physical number of drug shortages currently sits at 123, which is “a little above normal,” but there have been around 100 shortages at any given time over the past seven years. Some of those can be chalked up to companies not producing the volumes required to meet market demand. She also added that there were 38 new shortages in 2021, but the FDA is still dealing with them this year.

For some temporary solutions, Jensen said that she has been coordinating with international regulatory authorities more often, to find out what is being marketed and to see if they can import a drug in short supply in the US. She is also coordinating experts to try to mitigate the situation, providing the public with widely available information as well as expediting the review of anything that manufacturers need to boost supplies.

However, Jensen said that the increase in the demand for drugs is not something that will be going away anytime soon.

“One thing that we really see going forward are these demand increases, this is something that is fairly new to us. It’s something that we’re looking at closely,” she said. “We would really want companies to inform us if they’re seeing spikes in demand because that’s currently not required.”

While producers do need to let the FDA know of supply disruption, companies do not need to let the FDA know of spikes in demand, and Jensen would like to see this changed. Also, she would like to apply different uses for supply chain data to look for signals or patterns and ultimately predict shortages.

Jensen added that in some cases it is impossible to prevent a shortage, but she stresses that better notification of when companies are seeing a spike in demand can be a key solution:

In those cases, when we can prevent (a shortage), we are using those same tools to prevent it. So, we’re expediting review, we’re looking at potential ways that we can use flexibility to allow a product to be on the market while the company fixes a problem. All of those tools are really the same for prevention and mitigation. But I think that really the key is early notification. The earlier companies let us know about an issue the earlier we can deal with it.

With the uptick in respiratory illnesses and shortages of drugs such as amoxicillin, Jensen noted that it’s a matter of reaching out and monitoring the market to see what manufacturers are contending with. Also, Jensen will look to work with pharmacy associations and other trade groups to see what is occurring at the pharmacy level and then “put all of those pieces together” to try and help end the shortage.

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nTIDE November 2022 Jobs Report: People with disabilities continue to outperform people without disabilities in labor market

East Hanover, NJ – December 2, 2022 – Job numbers rose again for people with disabilities, in contrast to people without disabilities, according to…



East Hanover, NJ – December 2, 2022 – Job numbers rose again for people with disabilities, in contrast to people without disabilities, according to today’s National Trends in Disability Employment – Monthly Update (nTIDE), issued by Kessler Foundation and the University of New Hampshire’s Institute on Disability (UNH-IOD). People with disabilities continued to show strength in the labor market in November, as evidenced by the substantial rise in their employment-to-population ratio.

Credit: Kessler Foundation

East Hanover, NJ – December 2, 2022 – Job numbers rose again for people with disabilities, in contrast to people without disabilities, according to today’s National Trends in Disability Employment – Monthly Update (nTIDE), issued by Kessler Foundation and the University of New Hampshire’s Institute on Disability (UNH-IOD). People with disabilities continued to show strength in the labor market in November, as evidenced by the substantial rise in their employment-to-population ratio.

Month-to-Month nTIDE Numbers (comparing October 2022 to November 2022)

Based on data from the U.S. Bureau of Labor Statistics (BLS) Jobs Report released today, the employment-to-population ratio for people with disabilities (ages 16-64) increased from 35.5 percent in October to 36.5 percent in November (up 2.8 percent or 1 percentage point). For people without disabilities (ages 16-64), the employment-to-population ratio decreased from 74.6 percent in October to 74.4 percent in November (down 0.3 percent or 0.2 percentage point). The employment-to-population ratio, a key indicator, reflects the percentage of people who are working relative to the total population (the number of people working divided by the number of people in the total population multiplied by 100).

“Similar to last month, the employment-to-population ratio for people with disabilities increased and remains above historic highs. For those without disabilities, however, the ratio dropped,” said John O’Neill, PhD, director of the Center for Employment and Disability Research at Kessler Foundation. “This decline may be a sign of the Fed’s efforts to slow the labor market. This is interesting in light of this month’s strong gain for people with disabilities.”

Findings were similar for November’s labor force participation rate. For people with disabilities (ages 16-64), the labor force participation rate was increased slightly from 38.7 percent in October to 38.8 percent in November (up 0.3 percent or 0.1 percentage point). Conversely, the labor force participation rate decreased slightly for people without disabilities (ages 16-64), from 77.1 percent in October to 76.9 percent in November (down 0.3 percent or 0.2 percentage point). The labor force participation rate is the percentage of the population that is working, not working, and on temporary layoff, or not working and actively looking for work.

“While labor force participation for people with disabilities remains stable, increases in the employment to population ratio for people with disabilities suggest that more people with disabilities are succeeding in finding jobs,” remarked Debra Brucker, PhD, research associate professor at the UNH-IOD. “Keep in mind that gains in employment may in part reflect the need to boost income in the face of rising prices. Also, these data are not seasonally adjusted, so some of this increase may be due to seasonal employment.”

Why have people with disabilities been outperforming people without disabilities? Favorable changes in the workplace as employers adapted to COVID-19 restrictions may be a factor. Our new survey compares the workplaces of 2017 and 2022, revealing gains in recruiting, hiring, accommodating, and retaining employees with disabilities. Read more about the 2022 National Employment & Disability Survey: Effects of COVID-19 Pandemic Supervisor Perspectives.

Year-to-Year nTIDE Numbers (Comparing November 2021 to November 2022)

Reflecting the continued strength of the employment of people with disabilities over the course of the year, the employment-to-population ratio for working-age people with disabilities increased substantially from 34.6 percent in November 2021 to 36.5 percent in November 2022 (up 5.5 percent or 1.9 percentage points). However, the employment-to-population ratio increased slightly for working-age people without disabilities, from 73.8 percent in November 2021 to 74.4 percent in November 2022 (up 0.8 percent or 0.6 percentage points).

Similarly, for people with disabilities (16-64), the labor force participation rate increased substantially from 37.7 percent in November 2021 to 38.8 percent in November 2022 (up 2.9 percent or 1.1 percentage points). The labor force participation rate increased slightly for people without disabilities (ages 16-64), from 76.7 percent in November 2021 to 76.9 percent in November 2022 (up 0.3 percent or 0.2 percentage points).

In November, among workers ages 16-64, the 5,962,000 workers with disabilities represented 4 percent of the total 148,009,000 workers in the U.S.

Ask Questions about Disability and Employment

Each nTIDE release is followed by an nTIDE Lunch & Learn online webinar. This live broadcast, hosted via Zoom Webinar, offers attendees Q&A on the latest nTIDE findings, provides news and updates from the field, as well as invited panelists to discuss current disability-related findings and events. On December 2, 2022 at 12:00 pm Eastern, Chai Feldblum, JD, vice chair the of Ability One Commission, a federal agency devoted to the employment of people with significant disabilities, joins Drs. O’Neill and Brucker, and Denise Rozell, Policy Strategist at the Association of University Centers on Disabilities (AUCD). Join our Lunch & Learns live or visit the nTIDE archives at:

NOTE: The statistics in the nTIDE are based on Bureau of Labor Statistics numbers but are not identical. They are customized by UNH to combine the statistics for men and women of working age (16 to 64). nTIDE is funded, in part, by grants from the National Institute on Disability, Independent Living and Rehabilitation Research (NIDILRR) (90RT5037) and Kessler Foundation.

About the Institute on Disability at the University of New Hampshire

The Institute on Disability (IOD) at the University of New Hampshire (UNH) was established in 1987 to provide a university-based focus for the improvement of knowledge, policies, and practices related to the lives of persons with disabilities and their families. For information on the NIDILRR-funded Research and Training Center on Disability Statistics, visit

About Kessler Foundation

Kessler Foundation, a major nonprofit organization in the field of disability, is a global leader in rehabilitation research that seeks to improve cognition, mobility, and long-term outcomes – including employment – for people with neurological disabilities caused by diseases and injuries of the brain and spinal cord. Kessler Foundation leads the nation in funding innovative programs that expand opportunities for employment for people with disabilities. For more information, visit

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Scientists reveal encouraging findings in first-in-human clinical trial evaluating HIV vaccine approach

NEW YORK and LA JOLLA, CA—While scientists have struggled in the past to create an effective vaccine against HIV, a novel vaccine design strategy being…



NEW YORK and LA JOLLA, CA—While scientists have struggled in the past to create an effective vaccine against HIV, a novel vaccine design strategy being pursued by researchers at Scripps Research, IAVI, Fred Hutchinson Cancer Center (Fred Hutch) and the National Institutes of Health, National Institute of Allergy and Infectious Diseases (NIAID) Vaccine Research Center (VRC) shows new promise, according to data from a first-in-human clinical trial.


NEW YORK and LA JOLLA, CA—While scientists have struggled in the past to create an effective vaccine against HIV, a novel vaccine design strategy being pursued by researchers at Scripps Research, IAVI, Fred Hutchinson Cancer Center (Fred Hutch) and the National Institutes of Health, National Institute of Allergy and Infectious Diseases (NIAID) Vaccine Research Center (VRC) shows new promise, according to data from a first-in-human clinical trial.

In a paper published in Science on December 2, 2022, the scientists reveal critical new insights into their novel vaccine strategy, which involves a stepwise approach to producing antibodies capable of targeting a wide range of HIV variants. 

“The data we are publishing in Science demonstrates for the first time that one can design a vaccine that elicits made-to-order antibodies in humans. We specified in advance certain molecular properties of the antibodies that we wanted to elicit, and the results of this trial show that our vaccine antigen consistently induced precisely those types of antibodies,” says co-senior author William Schief, PhD, a professor and immunologist at Scripps Research and executive director of vaccine design at IAVI’s Neutralizing Antibody Center, whose laboratory developed the vaccine antigen. “We believe this vaccine design strategy will be essential to make an HIV vaccine and may help the field create vaccines for other difficult pathogens.”

The Phase 1 trial, known as IAVI G001, tested the first stage in a multi-stage HIV vaccine regimen the researchers are developing. The trial results show that the vaccine had a favorable safety profile and induced the targeted response in 97% of people who were vaccinated. Importantly, the Science study also provides a detailed immunological analysis of the vaccine responses.

“HIV represents an area of dire unmet need across the world, which is what makes the findings from our Phase 1 clinical trial so encouraging,” says Mark Feinberg, MD, PhD, president and CEO of IAVI. “Through the close-knit collaboration of many different scientists, disciplines and institutions, we are that much closer to designing an effective vaccine that could help end the HIV pandemic.”  

Priming the Immune System

Broadly neutralizing antibodies (bnAbs) are a rare type of antibody that can fight and protect against many different variants of a virus—including HIV. This is why scientists have tried to develop an HIV vaccine that induces bnAbs, but thus far without success.   

The researchers in the study are using a strategy known as ‘germline targeting’ to eventually produce bnAbs that can protect against HIV. The first step of germline targeting involves stimulating the rare immune cells—known as bnAb-precursor B cells—that can eventually evolve into the cells that produce the bnAbs needed to block the virus. To accomplish this first step, the researchers designed a customized molecule—known as an immunogen—that would “prime” the immune system and elicit responses from these rare bnAb-precursor cells.

The overarching goal of the IAVI G001 trial was to determine if the vaccine had an acceptable safety profile and could induce responses from these bnAb-precursor B cells.

“Through extensive safety and tolerability monitoring during the trial, we showed the vaccine had a favorable safety profile, while still inducing the necessary target cells,” says study author Dagna Laufer, MD, vice president and head of clinical development at IAVI. “This represents a large step forward in developing an HIV vaccine that is both safe and effective.”

To determine if the targeted bnAb-precursor B cells were induced, the researchers carried out a sophisticated analytical process.

“The workflow of multidimensional immunological analyses has taken clinical trial evaluation to the next level,” says co-senior author Adrian B. McDermott, PhD, former chief of the Vaccine Immunology Program at the NIAID VRC. “In evaluating these important immunological factors, we helped show why the vaccine antigen was able to induce the targeted response in 97% of vaccine recipients.” 

IAVI G001 was sponsored by IAVI and took place at two sites: George Washington University (GWU) in Washington, D.C., and Fred Hutch in Seattle, enrolling 48 healthy adult volunteers. Participants received either a placebo or two doses of the vaccine antigen, eOD-GT8 60mer, along with an adjuvant developed by the pharmaceutical company GSK. Julie McElrath, MD, PhD, co-senior author, senior vice president and director of Fred Hutch’s Vaccine and Infectious Disease Division, and David Diemert, MD, professor of medicine at GWU School of Medicine and Health Sciences, were lead investigators at the trial sites.

A Deeper Immunological Dive

The study also carefully examined the properties of the antibodies and B cells induced by the vaccine antigen, in what Schief likens to “looking under the car hood” to understand how the immune system operated in response to the vaccine. One analysis showed that the vaccine antigen first stimulated an average of 30 to 65 different bnAb precursors per person vaccinated, and then caused those cells to multiply. This helped explain why the vaccine induced the desired response in almost all participants.

Other analyses delved into the specific mutations the bnAb-precursor B cells acquired over time and how tightly they bound to the vaccine antigen. These investigations showed that that after each dose of the vaccine, the bnAb-precursor B cells gained affinity and continued along favorable maturation pathways.

One concern for this type of vaccine approach is the notion of “competitors”—in other words, the B cells induced by the vaccine antigen that are not bnAb precursors. The researchers extensively studied the “competitor” responses, and the results were very encouraging. Although the majority of the B cells triggered by vaccination were, in fact, “competitors”, these undesired B cells could not match the binding strength of the desired bnAb precursors and did not seem to impede maturation of the bnAb-precursor responses.

“These findings were very encouraging, as they indicated that immunogen design principles we used could be applied to many different epitopes, whether for HIV or even other pathogens,” adds Schief.

With these promising data in hand spanning both safety and immune responses, the researchers will continue to iterate and design boosting immunogens that could eventually induce the desired bnAbs and provide protection against the virus. These findings also come shortly after two additional studies in Immunity published in September 2022, which helped validate the germline-targeting approach for vaccinating against HIV.

“Working together with IAVI, Scripps Research, the VRC, GWU, additional investigators at Fred Hutch and many others, this trial and additional analyses will help inform design of the remaining stages of a candidate HIV vaccine regimen—while also enabling others in the field to develop vaccine strategies for additional viruses,” says McElrath of Fred Hutch.

IAVI, Scripps Research, NIAID, the Bill & Melinda Gates Foundation and the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) through the United States Agency for International Development (USAID) are partnering with the biotechnology company Moderna to develop and test mRNA delivery of these HIV vaccine antigens. Two Phase I clinical trials are underway that build on IAVI G001, one (IAVI G002) at four sites in the U.S. and another (IAVI G003) at the Center for Family Health Research in Kigali, Rwanda, and The Aurum Institute in Tembisa, South Africa. Both are testing mRNA delivery of the eOD-GT8 60mer that was evaluated as recombinant protein in IAVI G001, and the U.S. trial includes a boost antigen designed by the Schief lab and delivered with Moderna mRNA technology. A third trial (HVTN302), at ten sites in the U.S., is testing mRNA delivery of three different stabilized HIV trimers designed in the Schief laboratory that are candidates for late-stage boosters in multi-stage vaccines aiming to induce bnAbs. Using mRNA technology could significantly accelerate the pace of HIV vaccine development as it allows for faster production of clinical trial material.

This work was supported by the Bill & Melinda Gates Foundation Collaboration for AIDS Vaccine Discovery; the IAVI Neutralizing Antibody Center; NIAID; Scripps Center for HIV/AIDS Vaccine Immunology and Immunogen Discovery and Scripps Consortium for HIV/AIDS Vaccine Development; and the Ragon Institute of MGH, MIT, and Harvard. Other collaborating organizations include Duke Human Vaccine Institute, Karolinska Institutet, and La Jolla Institute. 

Research at the IAVI Neutralizing Antibody Center that contributed to the development of the vaccine antigen eOD-GT8 60mer was also made possible by the government of the Netherlands through the Minister of Foreign Trade & Development Cooperation and through the generous support of the American people through PEPFAR through USAID. The contents are the responsibility of IAVI and Scripps Research and do not necessarily reflect the views of PEPFAR, USAID, or the United States government.

About IAVI

IAVI is a nonprofit scientific research organization dedicated to addressing urgent, unmet global health challenges including HIV and tuberculosis. Its mission is to translate scientific discoveries into affordable, globally accessible public health solutions. Read more at

About Scripps Research

Scripps Research is an independent, nonprofit biomedical institute ranked the most influential in the world for its impact on innovation by Nature Index. We are advancing human health through profound discoveries that address pressing medical concerns around the globe. Our drug discovery and development division, Calibr, works hand-in-hand with scientists across disciplines to bring new medicines to patients as quickly and efficiently as possible, while teams at Scripps Research Translational Institute harness genomics, digital medicine and cutting-edge informatics to understand individual health and render more effective healthcare. Scripps Research also trains the next generation of leading scientists at our Skaggs Graduate School, consistently named among the top 10 US programs for chemistry and biological sciences. Learn more at

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