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Without Yield Support, the Dollar Wilts

Overview: Falling US yields weigh on the US dollar.  The 10-year Treasury yield is flirting with the 1.50% mark, and the greenback is trading heavily against all the major and most emerging market currencies. European and the Asia Pacific benchmark…

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Overview: Falling US yields weigh on the US dollar.  The 10-year Treasury yield is flirting with the 1.50% mark, and the greenback is trading heavily against all the major and most emerging market currencies. European and the Asia Pacific benchmark yields are lower as well.  The JP Morgan Emerging Market Currency Index is edging higher for the fourth consecutive session.  The lower yields are not doing equities much good today.  Outside of China, the large equity markets in the region fell, and the MSCI Asia Pacific Index is posting back-to-back losses.  The three-day rally in Europe's Dow Jones Stoxx 600 is at risk as most sectors, but health care and real estate, are losing ground.  Financials are the largest drag.  US future indices are a little changed to slightly firmer.  Oil and other industrial commodities are firmer, and the CRB Index closed yesterday at new six-year highs.  Gold is unable to benefit from the weaker dollar and lower interest rates.  The upside momentum that had carried it briefly above $1900 fizzled.  

Asia Pacific

China reported a smaller than expected rise in last month's consumer prices but a larger rise in producer prices.  Falling food prices helped temper the rise in consumer prices to 1.3% rather than 1.6% that the median in Bloomberg's survey projected.  The decline in pork prices helped keep food prices in check, while non-food prices rose by 0.9%.  Producer price inflation accelerated to 9.0% from 6.8%.  The median forecast was 8.5%.  Oil, metals, and chemicals were the drivers.  Beijing is trying to finesse lower producer prices by cracking down on unauthorized activity, but it does not appear sufficient.  Reports suggest it is considering some sort of cap on thermal coal prices before peak summer demand.  One proposal would cap the price to the miners, while another proposal was to limit the price at the port.  Still, the discussion shows that Chinese officials are still reluctant to allow supply/demand to adjust prices.  If thermal coal prices or other commodities are not allowed to move freely, is Beijing really prepared to allow the yuan to be convertible as some are suggesting could take place with the introduction of a digital yuan?  

The Reserve Bank of Australia did not adjust policy last week, but comments today suggest it may join the queue of central banks adjusting their stance as the inoculations are gradually allowing some return to normalcy.  Former RBA member Edwards said that the RBA would likely scale back its QE next month, which others, including ourselves, had suggested was possible.   The RBA's Assistant Governor Kent admitted he has been surprised by the strength of the rebound and is optimistic about growth fueling wage increases and inflation.  Currently, the RBA targets the April 2024 bond at 10 bp.  It is to decide next month whether to switch it to the November 2024 maturity.  Targeting the 3-year yield at the cash rate is a way to underscore the lack of intent to raise rates in the interim. 

The dollar is trapped in almost a 20-pip range against the yen today in the upper end of this week's range.  It has not been above JPY109.65 so far this week nor below about JPY109.20.  There are about $1.2 bln in options in the JPY109.00-JPY109.10 area that roll-off today.  The benchmark three-month implied volatility reached almost 5.53% yesterday, its lowest level since February 2020. The Australian dollar is steady, trading inside yesterday's range, which was inside Monday's range (~$0.7725-$0.7765).  Like the dollar-yen, the Aussie is also in a 20-tick range so far today.  The Chinese yuan rose today, recouping the losses seen in the past two sessions.  The dollar reached CNY6.4120 at the end of last week but has consistently recorded lower highs and lower lows this week.  The PBOC's reference rate for the dollar was set at CNY6.3956, spot on expectations.  It is beginning to look as if official intent is more about breaking the one-way market that had appeared to develop and stabilize the yuan rather than reverse it.  Whether defending a set line, which some have suggested at CNY6.35 or not, still has to be seen.

Europe

The ink G7 finance minister agreement on the minimum corporate tax is hardly even dry, and the first exception is being sought.  The UK (and apparently the EU) want to exclude financial services from the new global tax regime.  Separately, the US and the EU will have a rapprochement that will resolve the two outstanding disputes:  The goal is to resolve the Boeing/Airbus subsidy issue by July 11 and end the steel and aluminum tariffs imposed by the Trump administration on national security grounds by the end of the year.  The US has protested but will not escalate the sanctions for the Nord Stream 2 pipeline, and the tax reform would see European countries drop their digital tax initiatives.  

Meanwhile, Europe is gradually taking a harder line against China.  The EU Parliament is not proceeding with the ratification of the EU-China trade agreement struck at the end of last year.  Italy, which was the only G7 country to sign on to the Belt Road Initiative, has blocked Chinese acquisitions under Prime Minister Draghi. Europe has endorsed the US call for new efforts to find the origins of Covid-19, even though the origins are unnecessary to combat virus and protocols to tighten security as labs during such work are necessary regardless of the precise origin.

Germany reported a 15.5 bln euro trade surplus in April, down from 20.2 bln in March.  Exports growth slowed to 0.3% after a 1.3% gain previously.  Imports fell by 1.7%, more than expected after the March series was revised to show a 7.1% gain (initially 6.5%).  The smaller trade surplus translates into a smaller current account surplus (21.3 bln euros vs. 30.0 bln in March).   Unlike what we saw yesterday with the Japanese trade and current account figures,  the German current account is driven by the trade balance.  In Japan, the current account surplus is driven by foreign earnings, interest, royalties, and licensing fees, not trade in goods and services.  

The euro is firm, but it too is trading inside yesterday's range, which is inside Monday's range (~$1.2145-$1.2200).  There is an option for about 1.14 bln euros at $1.22 that expires today.  The market is also circumspect ahead of tomorrow's ECB meeting, for which a consensus has emerged that it will not return its bond-buying to that which prevailed before March.  We caution that knowing the ECB's bond-buying plans does not help trade the euro or European rates, both of which have risen since the ECB accelerated its buying.  Sterling, too is range-bound with last Friday's range (~$1.4085-$1.4200).  The general consolidative tone looks set to continue.  

America

The Bank of Canada meeting is the highlight of the North American session today.  At its last meeting in April, it announced it would slow its bond purchases and brought forward the closing of the output gap into H2 22.  Since then, Canada has reported back-to-back job losses.   The Canadian dollar has appreciated by almost 3.4% since that April meeting.  It is the strongest of the major currencies.  A decision on whether to proceed with tapering is expected at next month's meeting, not today. Yesterday, Canada reported an unexpected trade surplus for April.  Exports and imports fell, with motor vehicle trade disrupted by the line shutdowns due to the shortage of semiconductors.  Canada's energy trade balance was in surplus by about C$6.8 bln, while the non-energy balance was in deficit by about C$6.2 bln.  Canada had a C$6.4 bln surplus with the US and a C$2.2 bln deficit with China.  

The US reports wholesale inventory data today ahead of tomorrow's May CPI.  The focus, however, is shifting to next week's FOMC meeting.  Yesterday, the US sold $58 bln 3-year notes.  Although the high yield slipped fractionally, the bid cover ticked up, as did indirect bids.  Today, the Treasury sells $38 bln 10-year notes and tomorrow $24 bln 30-year bonds.  Tomorrow's four and eight-week bill auctions may draw more attention than usual as the earlier bill auctions showed a little uptick as the market anticipates that the Fed may have to tweak the interest it pays on reserves or the zero rate on the reverse repos (demand reached a new record of almost $500 bln yesterday). Separately, the US Senate passed (68-22) the bill to boost US competitiveness, which has some elements that were in the infrastructure bill.  The bill now gets taken up by the House.  

Mexico reports May CPI figures today.  The year-over-year pace is expected to pull back from the 6.08% pace seen in April but not sufficiently to change anything.  Moreover, the core rate is expected to quicken a little.  Through April, Mexico's core rate has risen by almost 5% at an annualized rate.  The market appears to lean toward a rate hike by the end of the year and as much as four hikes by the middle of 2022.   Brazil reports its IPCA inflation today as well.  The year-over-year pace is expected to have accelerated to nearly 8% from about 6.75% in April.  The central bank has already indicated it will raise rates next week by 75 bp, the third such move of the year.  It would lift the Selic rate above Mexico's cash target rate after having begun the year at half of it.

A little position squaring yesterday lifted the US dollar to almost CAD1.2120, but it has come back offered today and traded CAD1.2085 in the European morning.  This week's low so far is about CAD1.2055.  Key technical support is seen at CAD1.20, while CAD1.2145 marks the upper end of the recent range.  The Mexican peso is rising for the fourth consecutive session, the longest rally in two months.  The greenback finished last week near MXN19.96 and is testing MXN19.62 now, its lowest level in five months.  The next area of chart support is seen near MXN19.50.  The US dollar is also on its 2021 lows against the Brazilian real.  It has not been below BRL5.0 since last June. 


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AstraZeneca antibody cocktail fails to prevent Covid-19 symptoms in large trial

AstraZeneca said a late-stage trial failed to provide evidence that the company’s Covid-19 antibody therapy protected people who had contact with an infected person from the disease, a small setback in its efforts to find alternatives to vaccines.

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Astra antibody cocktail fails to prevent COVID-19 symptoms in large trial

(Reuters; )

June 15 (Reuters) – AstraZeneca (AZN.L) said on Tuesday a late-stage trial failed to provide evidence that its COVID-19 antibody therapy protected people who had contact with an infected person from the disease, a small setback in its efforts to find alternatives to vaccines.

The study assessed whether the therapy, a cocktail of two types of antibodies, could prevent adults who had been exposed to the virus in the past eight days from developing COVID-19 symptoms.

The therapy, AZD7442, was 33% effective in reducing the risk of people developing symptoms compared with a placebo, but that result was not statistically significant — meaning it might have been due to chance and not the therapy.

The Phase III study, which has not been peer reviewed, included 1,121 participants in the United Kingdom and the United States. The vast majority, though not all, were free of the virus at the start of the trial.

Results for a subset of participants who were not infected to begin with was more encouraging but the primary analysis rested on results from all participants.

FILE PHOTO: A computer image created by Nexu Science Communication together with Trinity College in Dublin, shows a model structurally representative of a betacoronavirus which is the type of virus linked to COVID-19, better known as the coronavirus linked to the Wuhan outbreak, shared with Reuters on February 18, 2020. NEXU Science Communication/via REUTERS

“While this trial did not meet the primary endpoint against symptomatic illness, we are encouraged by the protection seen in the PCR negative participants following treatment with AZD7442,” AstraZeneca Executive Vice President Mene Pangalos said in a statement.

The company is banking on further studies to revive the product’s fortunes. Five more trials are ongoing, testing the antibody cocktail as treatment or in prevention.

The next one will likely be from a larger trial testing the product in people with a weakened immune system due to cancer or an organ transplant, who may not benefit from a vaccine.

TARGETED ALTERNATIVES

AZD7442 belongs to a class of drugs called monoclonal antibodies which mimic natural antibodies produced by the body to fight off infections.

Similar therapies developed by rivals Regeneron (REGN.O) and Eli Lilly (LLY.N) have been approved by U.S. regulators for treating unhospitalised COVID patients.

European regulators have also authorised Regeneron’s therapy and are reviewing those developed by partners GlaxoSmithKline (GSK.L) and Vir Biotechnology (VIR.O) as well as by Lilly and Celltrion (068270.KS).

Regeneron is also seeking U.S. authorisation for its therapy as a preventative treatment.

But the AstraZeneca results are a small blow for the drug industry as it tries to find more targeted alternatives to COVID-19 inoculations, particularly for people who may not be able to get vaccinated or those who may have an inadequate response to inoculations.

The Anglo-Swedish drugmaker, which has faced a rollercoaster of challenges with the rollout of its COVID-19 vaccine, is also developing new treatments and repurposing existing drugs to fight the virus.

AstraZeneca also said on Tuesday it was in talks with the U.S. government on “next steps” regarding a $205 million deal to supply up to 500,000 doses of AZD7442. Swiss manufacturer Lonza (LONN.S) was contracted to produce AZD7442.

Shares in the company were largely unchanged on the London Stock Exchange.

The full results will be submitted for publication in a peer-reviewed medical journal, the company said.

Reporting by Vishwadha Chander in Bengaluru; Editing by Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/business/healthcare-pharmaceuticals/astrazeneca-says-its-antibody-treatment-failed-in-preventing-covid-19-exposed-2021-06-15

 

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Government

Former FDA Head Takes on Exec Role at Flagship’s Preemptive Health Initiative

Stephen Hahn, the Commissioner of the U.S. Food and Drug Administration under former President Donald Trump, took on a new role as chief medical officer of a new health security initiative launched by Flagship Pioneering, a life sciences venture firm…

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Former FDA Head Takes on Exec Role at Flagship’s Preemptive Health Initiative

 

Stephen Hahn, the Commissioner of the U.S. Food and Drug Administration (FDA) under former President Donald Trump, has taken on a new role as chief medical officer of a new health security initiative launched by Flagship Pioneering, a life sciences venture firm that incubates and curates biopharma companies.

First announced Monday, Flagship’s Preemptive Medicine and Health Security initiative aimed at developing products that can help people before they get sick. This division will focus on infectious disease threats and pursue bold treatments for existing diseases, including cancer, obesity, and neurodegeneration. 

In a brief statement, Hahn, who served as commissioner from December 2019 until January 2021, said the importance of investing in innovation and preemptive medications has never been more apparent. 

“In my career I have been a doctor and a researcher foremost and it is an honor to join Flagship Pioneering in its efforts to prioritize innovation, particularly in its Preemptive Medicine and Health Security Initiative. The more we can embrace a “what if …” approach the better we can support and protect the health and well-being of people here in the U.S. and around the world,” Hahn said in a statement. 

During his time at the FDA, Hahn was at the forefront of the government’s effort to battle the COVID-19 pandemic. His office oversaw the regulatory authorization of antivirals, antibody therapeutics and vaccines, as well as diagnostics and other tools to battle the novel coronavirus. 

Kevin Dietsch-Pool/Getty Images

Hahn bore the brunt of verbal barbs aimed at the FDA by the former president for not rushing to authorize a vaccine for COVID-19 ahead of the November 2020 election. The second vaccine authorized by the FDA for COVID-19 was developed by Moderna, a Flagship company. 

Prior to his confirmation as FDA Commissioner, Hahn, a well-respected oncologist, served as chief medical executive of the vaunted The University of Texas MD Anderson Cancer Center. Hahn was named deputy president and chief operating officer in 2017. In that role, he was responsible for the day-to-day operations of the cancer center, which includes managing more than 21,000 employees and a $5.2 billion operating budget. He was promoted to that position two years after joining MD Anderson as division head, department chair and professor of Radiation Oncology. Prior to MD Anderson, Hahn served as head of the radiation oncology department at the University of Pennsylvania’s Perelman School of Medicine.

Flagship Founder and Chief Executive Officer Noubar Afeyan said the COVID-19 pandemic that shut down economies and caused the deaths of more than 3.8 million people across the world was an important reminder that health security is a top global priority. In addition, the ongoing pandemic brings into “stark focus” the importance of preemptive medications. 

Hahn, who helmed the FDA for three years and before that served as chief medical executive at The University of Texas MD Anderson Cancer Center, has extensive experience overseeing clinical and administrative programs. Afeyan said the new division would benefit from Hahn’s experience as FDA Commissioner and help steer the Preemptive Medicine and Health Security initiative as it explores Flagship’s “growing number of explorations and companies in this emerging field.”

It is not unusual for former FDA heads to take prominent roles with companies. For example, former FDA Commissioner Scott Gottlieb, Trump’s first FDA Commissioner, took a position on the Pfizer Board of Directors weeks after departing his government role. He has also taken positions on other boards since then, including Aetion, FasterCures and Illumina.

 

BioSpace source:

https://www.biospace.com/article/former-fda-head-stephen-hahn-takes-cmo-role-at-flagship-pioneering-preemptive-health-initiative-

 

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Five U.S. states had coronavirus infections even before first reported cases – study

At least seven people in five U.S. states were infected with the novel coronavirus weeks before those states reported their first cases, a new government study showed.

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Five U.S. states had coronavirus infections even before first reported cases – study

(Reuters) – At least seven people in five U.S. states were infected with the novel coronavirus weeks before those states reported their first cases, a new government study showed.

Participants who reported antibodies against SARS-CoV-2 were likely exposed to the virus at least several weeks before their sample was taken, as the antibodies do not appear until about two weeks after a person has been infected, the researchers said.

The latest results build on findings from a Centers for Disease Control and Prevention study that suggested the novel coronavirus may have been circulating in the United States last December, well before the first COVID-19 case was diagnosed on Jan. 19, 2020.

A protective face mask lays, as the global outbreak of the coronavirus disease (COVID-19) continues, beside leaves at the lakefront in Chicago, Illinois, U.S., December 6, 2020. REUTERS/Shannon/File Photo

The positive samples came from Illinois, Massachusetts, Mississippi, Pennsylvania and Wisconsin, and were part of a study of more than 24,000 blood samples taken for a National Institutes of Health research program between Jan. 2 and March 18, 2020.

Samples from participants in Illinois were collected on Jan. 7 and Massachusetts on Jan. 8, suggesting that the virus was present in those states as early as late December.

“This study allows us to uncover more information about the beginning of the U.S. epidemic,” said Josh Denny, one of the study authors.

The findings were published in the journal Clinical Infectious Diseases.

Reporting by Mrinalika Roy in Bengaluru; Editing by Anil D’Silva

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/business/healthcare-pharmaceuticals/five-us-states-had-coronavirus-infections-even-before-first-reported-cases-study-2021-06-15

 

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