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Tech Sell-Off Continues

Overview:  The markets are unsettled.  Bond yields have jumped, tech stocks are leading an equity slump, and yesterday’s crude oil bounce reversed.  Gold, which peaked last week near $1877, has been dumped to around $1793.  The tech sell-off in the…

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Overview:  The markets are unsettled.  Bond yields have jumped, tech stocks are leading an equity slump, and yesterday's crude oil bounce reversed.  Gold, which peaked last week near $1877, has been dumped to around $1793.  The tech sell-off in the US carried into the Asia Pacific session, and Hong Kong led most markets lower.  The local holiday let Japanese markets off unscathed, though the Nikkei futures are off about 0.4%.  Australia and India managed to post minor gains as the MSCI Asia Pacific Index fell for the fourth time in five sessions.  Europe's Stoxx 600 has slid around 1.5% today, its fourth consecutive decline, but has clawed back nearly half the gains.  It is the longest retreat in two months.  US futures are lower, with the NASDAQ leading the move.   Near 1.64%, the US 10-year yield is at the upper end of this month's range.  Last month it reached 1.70%.  European bond yields are mostly 4-6 bp higher, and peripheral spreads have widened a little.  The dollar is sitting in the middle of the major currencies.  The dollar bloc, sterling, and the Norwegian krone, which are the risk-on, levered to growth currencies, are weaker.  The euro, yen, and Swiss franc are little changed but firmer.  The dollar briefly traded above JPY115.00 in Asia, without Tokyo,  before being pushed back. The steady euro has taken some pressure off most of the regional currencies.  The Turkish lira has been in a virtual freefall following President Erdogan's spirited defense of his efforts to drive down rates.    There was around 10 lira to the dollar in the middle of November.  Today, at its peak, there is about 12.48 lira to the dollar.  

Asia Pacific

Over the weekend, Japan expressed willingness to cap its strategic reserves.  Press reports indicated yesterday that India is amenable to coordinating a release of some of its oil stocks.  South Korea may also participate.  It has been under consideration for a couple of weeks, at least, in the US, and China appears willing to repeat September's release of crude from its reserves.  However,  it seems naive to have expected OPEC+ to simply standby.  January WTI posted a bearish outside down day ahead of the weekend by trading on both sides of the previous day's range and settling below the previous session's low.  Follow-through selling yesterday took it down about $1.20 from the close, but when OPEC+ announced that a coordinated release of the oil could prompt it to reconsider its own plans.  It is to meet next week to review its strategy. Through yesterday's low, January WTI had retreated by nearly 11% from the October 25 higher near $83.85.   A band of resistance is seen between $78 and $80.  

OPEC+ had previously agreed to boost output by 400k barrels a day per month to restore pre-pandemic output levels.  That said, not all the members can produce their quota, leading to a shortfall.  OPEC+, the IEA, and EIA all seem to agree that supply-demand considerations shift in next year, and the market will once again be in oversupply.  Moreover, OPEC+ argues that the real dislocation is not with oil as its with gas.   The US imports about 2.9 mln barrels a day, India, about 4.2 mln, and Japan, about 3.1 mln barrels a day.  South Korea imports around 2.5 mln barrels a day.  Together it is around 12.7 mln barrels a day of imports.   If together, 100 mln barrels are released, about eight days of imports would be covered.  This is a high estimate.  India, for example, has indicated it may release 5 mln barrels.  

Australia's flash November PMI was better than expected.  Manufacturing edged up to 58.5 from 58.2, while services rose to 55.0 from 51.8.  This produced a 55.0 composite reading, a gain from 52.1 in October.  Recall, the pandemic and lockdown led weakness in the economy in the May-August period.  The composite PMI bottomed in August at 43.3.  It has risen for three months but remains well off the peak in April of 58.9.  Separately, New Zealand real retail sales were hit in Q3 by the social restrictions, but the drop was not quite as bad as feared.  Reall retail sales fell 8.1% after a 3.3% increase in Q2.  Economists (Bloomberg median) had anticipated a 10.5% pullback.  The RBNZ meets the first thing tomorrow and is widely expected to hike 25 bp, to lift the cash rate to 0.75%. There is still a slight bias toward a larger move in the swaps market.  

The dollar briefly traded above JPY115.00 for the first time since March 2017.  We note that Japanese dealers were on holiday and did not participate in the move.  As risk-off sentiment took over, the dollar was sold back to JPY114.50.  Resistance in Europe has been found near JPY114.80.  Note that there is an option for about $980 mln at JPY115.50 that expires tomorrow.  The Australian dollar initially edged lower to almost $0.7210, its lowest levels since October 1 before steadying. A break of $0.7200 signals a retest of the late September low near $0.7170.  Initial resistance is seen in the $0.7230-$0.7250 area.  The PBOC is sending plenty of verbal signals that it does not want to see strong yuan gains, and today's fixing underscores that point.  The dollar's reference rate was set at CNY6.3929, wider than usual above the market expectation (Bloomberg) for CNY6.3904.  The greenback is firm inside yesterday's range.  Caution is advised here as the PBOC could escalate its disapproval.  

Europe

The flash EMU November PMI was better than expected.  The aggregate manufacturing PMI rose to 58.6 from 58.3.  The market anticipated a decline.  The service PMI rose to 56.6 from 54.6, also defying expectations for a sequentially weaker report.  The composite snapped a three-month slide and rose to 55.8 from 54.2.   The cyclical peak was in July at 60.2.   

A flash release is made for Germany and France.    Germany manufacturing slowed slightly (57.6 from 57.8) and held up better than expected (Bloomberg median 56.9).  Services actually improved (53.4 from 52.4).  The composite rose to 52.8 from 52.0 to end a three-month downdraft after peaking in July at 62.4.  French numbers were even better.  The manufacturing PMI rose to 54.6 from 53.6.  The service PMI rose to 58.2 from 56.6.   The composite improved to 56.3 from 54.7 to snap a four-month fall.  Recall that yesterday the Bundesbank warned that the German economy may practically stagnate this quarter and that inflation may approach 6% this month.  

The UK's flash PMI was more mixed.  The manufacturing PMI had been expected to have slowed but instead improved for the second consecutive month (58.2 from 57.8).  Services were nearly as weak as anticipated slipping to 58.6 from 59.1.  The composite eased slightly to 57.7 from 57.8, ending a two-month recovery from the June-August soft patch.  Meanwhile, Prime Minister Johnson's rambling speech yesterday hurt people's ears, and in terms of substance,  the changes to social care funding that may result in lower-income people having to sell homes to pay for support did not go over well.  It is spurring talk of a possible cabinet reshuffle. 

The euro has edged to a new low for the third session today, slipping to almost $1.1225 before catching a bid that lifted it back to $1.1275.  There is an option for around 765 mln euros at $1.1220 that expires today.  The nearby cap is seen in the $1.1290-$1.1310 area.   The euro may struggle to sustain upticks ahead of tomorrow's US PCE deflator report (inflation to accelerate).    Sterling met new sellers when it poked above $1.3400. It has ground lower in the European session, and sterling fell to almost $1.3355.  Note that the low for the year and month was set on November 12, slightly above $1.3350.  We see little chart support below there until closer to $1.3165.  

America

We suspect many pundits exaggerated the link between the renomination of Powell for a second term and the sell-off in US debt and technology shares.  First, it was not a surprise.  Second, it assumes a substantive difference in the conduct of monetary policy between Powell and Brainard.  There isn't.  The difference was on regulatory issues and on the role of climate change.  Third, the idea that the Fed may accelerate its bond purchases next month was sparked by the high CPI reading on November 10.  Yesterday, Bostic joined fellow Fed President Bullard.  Two governors (Clarida and Waller) also seem to be moving in that direction (Waller may be faster than Clarida). The fact or the matter, nearly all of the high-frequency data for October, including employment, auto sales,  retail sales, industrial production, and inflation, came in higher than expected.  The US sees the preliminary November PMI today.  It is expected to have risen for the second consecutive month after fall June-September.  

The reception to yesterday's US two- and five-year note auctions was relatively poor.  The higher yields (compared with the previous auctions) did not produce better bid-cover ratios.  Today's the Treasury comes back with $55 bln seven-year notes and re-opens the two-year floater.  Many observers see the debt ceiling constraint being likely an early 2022 problem rather than this year.  Still, tomorrow's sale of the four-week bill may be the test.  Recall that at last week's auction, the 4-week bill yield doubled to 11 bp.  

Europe's virus surge and social restrictions became a market factor last week.  Many think that the US is a few weeks behind Europe.  The seven-day infliction rate in the US rose 18% week-over-week.  Several states, including Colorado, Minnesota, and Michigan, are being particularly hard hit.  Nationwide 59% of Americans are reportedly fully vaccinated. However, it leaves about 47 mln adults and 12 mln teens unvaccinated. 

The risk-off mood and the drop in oil prices are helping the US dollar extend its gains against the Canadian dollar.  The greenback, which started the month below CAD1.24, is now pushing close to CAD1.2750 to take out last month's high.  A move above here would target CAD1.28 and then the September high near CAD1.2900.  Still, the market is getting stretched, and the upper Bollinger Band is slightly below CAD1.2730.  The risk-off mood does not sit right with the Mexican peso either.  The dollar settled above MXN21.00 yesterday, its highest close in eight months.  The same forces have lifted it to MXN21.1250 today. However, the anticipated gain in September retail sales (0.8% Bloomberg median after a flat report in August) may not give the peso much support if the risk-off continues. The high for the year was set on March 8 near MXN21.6360.  


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Researchers may have unlocked mechanism driving inflammation in rheumatoid arthritis

Researchers at Hokkaido University in Japan, in a collaboration with American scientists, may have identified neural crosstalk as the mechanism that drives…

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Researchers may have unlocked mechanism driving inflammation in rheumatoid arthritis

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Haven’t had COVID yet? It could be more than just luck

Even taking into account people who have had COVID but didn’t know it, there’s still likely to be a group of people who have never been infected.

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We all know a few of those lucky people who, somehow, have managed to avoid ever catching COVID. Perhaps you’re one of them. Is this a Marvel-esque superpower? Is there any scientific reason why a person might be resistant to becoming infected, when the virus seems to be everywhere? Or is it simply luck?

More than 60% of people in the UK have tested positive for COVID at least once. However, the number of people who have actually been infected with SARS-CoV-2, the virus that causes COVID-19, is thought to be higher. The calculated rate of asymptomatic infections varies depending on the study, though most agree it’s fairly common.

But even taking into account people who have had COVID and not realised it, there is still likely a group of people who never have. The reason why some people appear immune to COVID is one question that has persisted throughout the pandemic. As with so much in science, there isn’t (yet) one simple answer.

We can probably dismiss the Marvel-esque superpower theory. But science and luck likely both have a role to play. Let’s take a look.

The simplest explanation is that these people have never come into contact with the virus.

This could certainly be the case for people who have been shielding during the pandemic. People at significantly greater risk of severe disease, such as those with chronic heart or lung conditions, have had a tough couple of years.

Many of them continue to take precautions to avoid potential exposure to the virus. Even with additional safety measures, many of these people have ended up with COVID.

Due to the high level of community transmission, particularly with the extremely transmissible omicron variants, it’s very unlikely that someone going to work or school, socialising and shopping hasn’t been near someone infected with the virus. Yet there are people who have experienced high levels of exposure, such as hospital workers or family members of people who have had COVID, who have somehow managed to avoid testing positive.

We know from several studies vaccines not only reduce the risk of severe disease, but they can also cut the chance of household transmission of SARS-CoV-2 by about half. So certainly vaccination could have helped some close contacts avoid becoming infected. However, it’s important to note that these studies were done pre-omicron. The data we have on the effect of vaccination on omicron transmission is still limited.


Read more: Four strange COVID symptoms you might not have heard about


Some theories

One theory around why certain people have avoided infection is that, although they are exposed to the virus, it fails to establish an infection even after gaining entry to the airways. This could be due to a lack of the receptors needed for SARS-CoV-2 to gain access to cells.

Once a person does become infected, researchers have identified that differences in the immune response to SARS-CoV-2 play a role in determining the severity of symptoms. It is possible that a quick and robust immune response could prevent the virus from replicating to any great degree in the first instance.

The efficacy of our immune response to infection is largely defined by our age and our genetics. That said, a healthy lifestyle certainly helps. For example, we know that vitamin D deficiency can increase the risk of certain infections. Not getting enough sleep can also have a detrimental effect on our body’s ability to fight invading pathogens.

An illustration of SARS-CoV-2, the coronavirus that causes COVID-19.
The SARS-CoV-2 virus needs to attach to receptors to gain access to our cells. Kateryna Kon/Shutterstock

Scientists studying the underlying causes of severe COVID have identified a genetic cause in nearly 20% of critical cases. Just as genetics could be one determining factor of disease severity, our genetic makeup may also hold the key to resistance to SARS-CoV-2 infection.

I research SARS-CoV-2 infection on nasal cells from human donors. We grow these cells on plastic dishes which we can then add virus to and investigate how the cells respond. During our research we found one donor whose cells could not be infected with SARS-CoV-2.

We discovered some really interesting genetic mutations, including several involved with the body’s immune response to infection, that could explain why. A mutation we identified in a gene involved with sensing the presence of a virus has previously been shown to confer resistance to HIV infection. Our research is on a small number of donors and highlights that we’re still only scraping the surface of research into genetic susceptibility or resistance to infections.

There’s also the possibility that previous infection with other types of coronaviruses results in cross-reactive immunity. This is where our immune system may recognise SARS-CoV-2 as being similar to a recent invading virus and launch an immune response. There are seven coronaviruses that infect humans: four that cause the common cold, and one each that cause Sars (severe acute respiratory syndrome), Mers (Middle East respiratory syndrome) and COVID.

How long-lasting this immunity may be is another question. Seasonal coronaviruses that circulated pre-2020 were able to reinfect the same people after 12 months.


Read more: The common cold might protect you from coronavirus – here's how


If you’ve managed to avoid COVID to date, maybe you do have natural immunity to SARS-CoV-2 infection, or perhaps you’ve just been lucky. Either way, it’s sensible to continue to take precautions against this virus that we still know so little about.

Lindsay Broadbent receives funding from The Wellcome Trust.

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“Natural immunity” from omicron is weak and limited, study finds

SAN FRANCISCO, CA—May 18, 2022—In unvaccinated people, infection with the Omicron variant of SARS-CoV-2 provides little long-term immunity against…

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SAN FRANCISCO, CA—May 18, 2022—In unvaccinated people, infection with the Omicron variant of SARS-CoV-2 provides little long-term immunity against other variants, according to a new study by researchers at Gladstone Institutes and UC San Francisco (UCSF), published today in the journal Nature.

Credit: Photo: Michael Short/Gladstone Institutes

SAN FRANCISCO, CA—May 18, 2022—In unvaccinated people, infection with the Omicron variant of SARS-CoV-2 provides little long-term immunity against other variants, according to a new study by researchers at Gladstone Institutes and UC San Francisco (UCSF), published today in the journal Nature.

In experiments using mice and blood samples from donors who were infected with Omicron, the team found that the Omicron variant induces only a weak immune response. In vaccinated individuals, this response—while weak—helped strengthen overall protection against a variety of COVID-19 strains. In those without prior vaccination, however, the immune response failed to confer broad, robust protection against other strains.

“In the unvaccinated population, an infection with Omicron might be roughly equivalent to getting one shot of a vaccine,” says Melanie Ott, MD, PhD, director of the Gladstone Institute of Virology and co-senior author of the new work. “It confers a little bit of protection against COVID-19, but it’s not very broad.”

“This research underscores the importance of staying current with your vaccinations, even if you have previously been infected with the Omicron variant, as you are still likely vulnerable to re-infection,” says co-senior author Jennifer Doudna, PhD, who is a senior investigator at Gladstone, a professor at UC Berkeley, founder of the Innovative Genomics Institute, and an investigator of the Howard Hughes Medical Institute.

A Weaker Infection

As the Omicron variant of SARS-CoV-2 spread around the globe in late 2021 and early 2022, anecdotal evidence quickly mounted that it was causing less severe symptoms than Delta and other variants of concern. However, scientists weren’t initially sure why that was, or how a weaker infection might impact long-term immunity against COVID-19.

“When the Omicron variant first emerged, a lot of people wondered whether it could essentially act as a vaccine for people who didn’t want to get vaccinated, eliciting a strong and broad-acting immune response,” says Irene Chen, co-first author of the new study and graduate student in Ott’s lab. Other first authors are Rahul Suryawanshi, PhD, a Gladstone staff research scientist, and Tongcui Ma, PhD, scientist in the Roan Lab at Gladstone.

To find the answer, the team of researchers first examined the effect of Omicron in mice. Compared to an ancestral strain of SARS-CoV-2 and the Delta variant, Omicron led to far fewer symptoms in the mice. However, the virus was detected in airway cells, albeit at lower levels. Similarly, Omicron was able to infect isolated human cells but replicated less than other variants.

The team then characterized the immune response generated by Omicron infections. In mice infected with Omicron, despite the milder symptoms, the immune system still generated the T cells and antibodies typically seen in response to other viruses.

“We demonstrated in this study that the lower pathogenicity of Omicron is not because the virus cannot take hold,” says Nadia Roan, PhD, an associate investigator at Gladstone.

That leaves other reasons that might explain why Omicron differs from other variants in terms of symptoms and immunity, including the lower replication seen with Omicron or the types of antibodies that the immune system generates in response to the virus.

No Cross-Variant Protection

To gauge how the immune response against Omicron fared over time, the researchers collected blood samples from mice infected with the ancestral, Delta, or Omicron variants of SARS-CoV-2 and measured the ability of their immune cells and antibodies to recognize five different viral variants—ancestral (WA1), Alpha, Beta, Delta, and Omicron.

Blood from uninfected animals was unable to neutralize any of the viruses—in other words, block the ability of any of the viruses to copy themselves. Samples from WA1-infected animals could neutralize Alpha and, to a lesser degree, the Beta and Delta virus—but not Omicron. Samples from Delta-infected mice could neutralize Delta, Alpha and, to a lesser degree, the Omicron and Beta virus.

However, blood from Omicron-infected mice could only neutralize the Omicron variant.

The team confirmed these results using blood from ten unvaccinated people who had been infected with Omicron—their blood was not able to neutralize other variants. When they tested blood from 11 unvaccinated people who had been infected with Delta, the samples could neutralize Delta and, as had been seen in mice, the other variants to a lesser extent.

When they repeated the experiments with blood from vaccinated people, the results were different: vaccinated individuals with confirmed Omicron or Delta breakthrough infections all showed the ability to neutralize all the tested variants, conferring higher protection.

“When it comes to other variants that might evolve in the future, we can’t predict exactly what would happen, but based on these results, I’d suspect that unvaccinated people who were infected with Omicron will have very little protection,” says Ott. “But on the contrary, vaccinated individuals are likely to be more broadly protected against future variants, especially if they had a breakthrough infection.”

“Our results may be useful not only to inform individuals’ decisions on vaccination, but also for the design of future COVID-19 vaccines that confer broad protection against many variants,” says Charles Chiu, MD, PhD, a professor of infectious diseases at UCSF and a co-senior author of the work.

###

About the Research Project

The paper “Limited Cross-Variant Immunity after Infection with the SARS-CoV-2 Omicron Variant Without Vaccination” was published in the journal Nature on May 18, 2022.

Other authors are Abdullah Syed, Camille Simoneau, Alison Ciling, Mir Khalid, Bharath Sreekumar, Pei-Yi Chen, Renuka Kumar, Mauricio Montano, Ronne Gascon, Frank Soveg, Ashley George, and Warner Greene of Gladstone; Noah Brazer, Prachi Saldhi, Miguel Garcia-Knight, Alicia Sotomayor-Gonzalez, Venice Servillita, Amelia Gliwa, Jenny Nguyen, Xiaohui Fang, Mazharul Maishan, Michael Matthay, and Raul Andino of UCSF; and Ines Silva, Bilal Milbes, Noah Kojima, Victoria Hess, Maria Shacreaw, Lauren Lopez, Matthew Brobeck, Fred Turner, and Lee Spraggon of Curative, Inc.

The work was supported by the National Institutes of Health (grants F31 AI164671-01, U54HL147127 and R21AI59666), the Natural Sciences and Engineering Research Council of Canada (PDF-533021-2019), the Roddenberry Foundation, Pamela and Edward Taft, the Howard Hughes Medical Institute, the Van Auken Private Foundation, David Henke, Emergent Ventures at the Mercatus Center (Fast Grants #2164 and #2208), George Mason University, the Innovative Genomics Institute, the US Centers for Disease Control and Prevention (75D30121C10991), Abbott Laboratories, and the Sandler Program for Breakthrough Biomedical Research at UCSF.

About Gladstone Institutes

To ensure our work does the greatest good, Gladstone Institutes focuses on conditions with profound medical, economic, and social impact—unsolved diseases. Gladstone is an independent, nonprofit life science research organization that uses visionary science and technology to overcome disease. It has an academic affiliation with the University of California, San Francisco.


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