Aurelia Butler

All three candidates belong to the class of drugs known as antibody drug conjugates (ADC) and are in various stages of clinical development for the treatment of multiple solid cancer tumors. Unlike conventional chemotherapy, which can kill healthy cells, ADCs are designed to spare healthy cells while targeting cancer.The three have “multi-billion dollar worldwide commercial revenue potential for each company” by the mid-2030s, the two companies said.Under the deal, Merck will pay Daiichi Sankyo a $4 billion upfront payment in addition to $1.5 billion in continuation payments over the next two years. Merck may make additional payments of up to $16.5 billion contingent on future sales milestones.Shares of Daiichi Sankyo surged in Tokyo trade and were up 12% at 0046 GMT.Daiichi has six ADC candidates in its pipeline, including one jointly developed with AstraZeneca (NASDAQ:AZN). As a result of the agreement, Merck will take a pretax charge of $5.5 billion, or approximately $1.70 per share, reflecting the upfront payment and the continuation payments, resulting in a reduction in fourth-quarter and full-year 2023 results, the statement said.Merck’s investment in the pipeline assets and costs to finance the transaction will also result in a negative impact to earnings per share of about 25 cents in the first 12 months following the close of the transaction, the statement added. More

LONDON (Reuters) – The European Central Bank’s rate hiking cycle is over, according to all 85 economists polled by Reuters, but it won’t be until at least July 2024 before it begins easing as the battle against elevated inflation rattles on.In September the ECB raised its key interest rates by 25 basis points, taking the deposit rate to 4.00% and the refinancing rate to 4.50%, but signalled its 10th hike in a 14-month-long streak was likely to be its last.None of the 85 economists polled by Reuters Oct. 12-19 had another lift in their outlook, but the timing of the first cut was more uncertain.The median forecast and 58% majority view among economists, 48 of 83, showed it would be in the third quarter of next year, or later, and that the deposit rate would be at 3.50% by end-September.In a snap poll taken after the September meeting, 29 of 70 respondents said the first cut would be in the second quarter of next year, or earlier.But a little over 40% of respondents in the latest poll, 35 of 83, still said the first easing move would come before ECB Chief Christine Lagarde and the Governing Council meet in July. “Our model suggests a rate cut may come earlier but we would need to see more subdued data than is currently forecast so I think a cut in September 2024 is quite a balanced view,” said Kristian Toedtmann at DekaBank.A slight majority of economists in a separate Reuters poll see a cut by the U.S. Federal Reserve before mid-2024.When asked what was the bigger risk to their forecast, 25 economists said that it comes later than they currently expect while 19 said earlier.”Recent activity and inflation data have been weaker than expected, but this won’t stop Christine Lagarde from sticking firmly to the ‘higher-for-longer’ narrative,” noted Jack Allen-Reynolds at Capital Economics.French central bank Governor Francois Villeroy de Galhau repeated his view last week the ECB should keep its key interest rate at its current level – the highest in its near 25-year history – for as long as necessary.Inflation in the currency union has been on a downward trajectory but at 4.3% in September was still more than double the 2.0% ECB target. The downtrend is expected to continue, but the poll concluded it wouldn’t be until Q3 2025 at least before inflation reaches target. It was expected to average 5.6% this year, 2.7% in 2024 and 2.1% in 2025.The price of oil has recently bounced amid fears Israel’s military campaign in Gaza following a deadly attack by Palestinian militant group Hamas on Oct. 7 may escalate to a regional conflict. While the 20-country euro zone will narrowly dodge a recession, the economy was expected to have only flatlined last quarter and will do the same again in the current one as increased borrowing and living costs force consumers to rein in spending.”At the moment things are turning down so it is very likely all of us will be revising down our forecasts. There really isn’t much going for the euro zone right now,” said Melanie Debono at Pantheon Macroeconomics.Germany, Europe’s largest economy, likely shrank last quarter and will do so again this quarter and next, easily surpassing the technical definition of recession. Growth in France, the bloc’s second-biggest economy, is forecast to be relatively robust. (For other stories from the Reuters global economic poll: (nL4N3BG3AF)) More

“I would expect the deal to come after the elections,” Bukele told reporters at a press conference, adding that the negotiations with the lender have been “very productive.”Last week, a senior IMF official characterized the talks in the same way.Rodrigo Valdes, director of the IMF’s Western Hemisphere Department, described a recent mission to El Salvador as “a first step” toward reaching an agreement, but suggested that disagreements remain.At the time, Valdez did not specify a time-frame for reaching a deal.El Salvador’s presidential and legislative elections are scheduled for next February, with local elections set for the following month. More

SINGAPORE (Reuters) – The dollar was within a hair’s breadth of the closely watched 150 yen level on Friday, buoyed by a surge in the U.S. 10-year Treasury yield which in the previous session briefly reached 5% for the first time since 2007.The benchmark 10-year yield, which was last at 4.9813%, has climbed some 35 basis points this week, driven by rising expectations that the Federal Reserve is likely to keep interest rates higher for longer and mounting U.S. fiscal concerns. [US/]”The move up has been driven by the Fed leaving the market as a price insensitive buyer. Foreign demand has also waned. Combined with surprisingly large issuance from the deficit, it’s a classic supply and demand effect,” said Brian Jacobsen, chief economist at Annex Wealth Management.That kept pressure on the yen, which last bought 149.83 per dollar, not far from the psychological threshold of 150 per dollar which some traders bet could trigger an intervention from Japanese authorities, as happened last year.The dollar/yen pair tends to closely track changes in long-term Treasury yields, particularly in the 10-year maturity.Sterling was likewise 0.08% lower at $1.21285, though was some distance away from its two-week low of $1.2093 hit on Thursday.In the broader currency market, the U.S. dollar edged higher, supported by elevated Treasury yields.The dollar index gained 0.08% to 106.29, though was on track for a weekly loss.At a closely-watched speech on Thursday, Fed Chair Jerome Powell said the strength of the U.S. economy and continued tight labour markets could require still tougher borrowing conditions to control inflation, though rising market interest rates could reduce the need for the central bank to act.”The market seems to be more comfortable with the view that the Fed is going to pause, or at least pass on a rate rise out of the Oct. 31-Nov. 1 meeting,” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY).”Obviously, he’s still not shutting the door to the prospect of higher rates, but there were a few words in Powell’s (speech) that I do think represent a little bit of a softening in the tone.”Money markets are almost fully expecting the Fed to keep interest rates on hold at its upcoming policy meeting, compared to a roughly 87% chance a week ago, according to the CME FedWatch tool.Elsewhere, the euro eased 0.04% to $1.05755, while the Australian dollar lost 0.26% to last stand at $0.6312.The New Zealand dollar edged 0.35% lower to $0.5829, after having slid to an over 11-month low of $0.5816 on Thursday.The kiwi was on track for a weekly loss of nearly 1%, further pressured by data earlier this week which showed New Zealand’s consumer inflation slowed to a two-year low in the third quarter.In Asia, data on Friday showed Japan’s core inflation in September slowed below the 3% threshold for the first time in over a year but stayed above the central bank target, though that did little to move the yen.China is meanwhile due to announce its one and five-year loan prime rates later on Friday.”I expect the loan prime rates to stay steady, given that they left the medium-term lending rate unchanged this month,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY). “Usually they move in lockstep.” More

NEW YORK (Reuters) -Federal Reserve Bank of Dallas President Lorie Logan said on Thursday that recent data and higher bond market borrowing costs give the central bank space to deliberate on its next monetary policy move. “We have some time” before having to make the call whether to raise rates again or hold them steady, Logan said at a gathering of the Money Marketeers of New York University, citing a desirable tightening in financial conditions, in part reflecting the tightening in monetary policy.Logan acknowledged progress in lowering inflation while still being unsure that price pressures are ebbing to the Fed’s 2% target. She said a still-strong job market may need to weaken further to help the Fed achieve its inflation goals. Earlier on Thursday, Fed Chairman Jerome Powell told a New York audience that while more rate hikes may be needed if the economy doesn’t cool, a rise in real-world borrowing costs generated by the jump in Treasury yields may provide enough restraint to save the Fed from having to raise rates again. The Fed’s next policy meeting is set for Oct. 31-Nov. 1, and financial markets are virtually certain officials will again refrain from increasing rates, after leaving rates steady at their September meeting, at between 5.25% and 5.5%. While the cooling inflation pressures have taken pressure off the Fed to increase rates further, officials penciled in one more increase before the end of the year at their policy meeting last month. Since then, a number of Fed officials have said rates are at or near the peak, while some have said outright they don’t see another need for a fed funds rate increase short of renewed inflation pressures. “My focus is on price stability and what further tightening may be needed to achieve our mandate,” Logan said.She added that as she seeks to understand how much of the rise in yields reflects markets’ adjusting to a stronger economic outlook or whether they’re adjusting to a bigger need to be paid for taking on risk, it’s possible that markets will take some pressure off monetary policy. If tighter financial conditions are “persistent that could mitigate some of the need for further increases,” Logan said. In her remarks Logan also took stock of the outlook for the Fed’s balance sheet contraction policy. The Fed is allowing just shy of $100 billion per month in Treasury and mortgage bonds it owns to mature and not be replaced, in a process that has thus far caused central bank holdings to fall by about $1 trillion since the summer of 2022. Logan said the Fed’s reverse repo facility, which currently is taking in just over $1 trillion from eligible financial firms, will likely need to fall to nearly zero before the Fed can determine if there are enough reserves in the system to end its balance sheet drawdown. Logan also said that the recent jump in bond yields has appeared to be orderly. She said the Fed has tools in place to deal with market stress if it arrive, such as the Standing Repo Facility, which can quickly convert Treasury holdings into cash for eligible financial firms. More

TOKYO (Reuters) -Japan’s core inflation in September slowed below the 3% threshold for the first time in over a year but stayed above the central bank target, keeping alive expectations that policymakers will phase out ultra-easy monetary policy.The data will be among indicators the Bank of Japan (BOJ) will scrutinise at its two-day policy meeting ending on Oct. 31, when it will produce fresh quarterly growth and price forecasts.”While inflation weakened in September, we think inflation will only fall below the BoJ’s 2% target by the end of next year,” said Marcel Thieliant, head of Asia-Pacific at Capital Economics.The nationwide core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.8% in September from a year earlier – the first time it has slowed below 3% since August 2022, government data showed on Friday. It eased from 3.1% in August.All the same, the rate has tracked above the BOJ’s 2% target for 18 straight months.The core-core index, which strips away fresh food and fuel costs, rose 4.2% in September from a year earlier, the data showed, slowing from a 4.3% gain in August.Markets are rife with speculation the BOJ will soon end negative short-term interest rates and yield curve control, which sets a 0% cap for the 10-year bond yield, in response to broadening inflationary pressure.The BOJ has played down the near-term chance of phasing out its massive stimulus, arguing the recent cost-driven price rises need to change into demand-driven increases in inflation for the bank to consider hiking interest rates. More

NEW YORK (Reuters) – Relentless selling of U.S. government bonds has brought Treasury yields to their highest level in more than a decade and a half, roiling everything from stocks to the real estate market.The yield on the benchmark 10 year Treasury – which moves inversely to prices – hit 5% late Thursday, a level last seen in 2007. Expectations that the Federal Reserve will keep interest rates elevated and mounting U.S. fiscal concerns are among the factors driving the move. Because the $25-trillion Treasury market is considered the bedrock of the global financial system, soaring yields on U.S. government bonds have had wide-ranging effects. The S&P 500 is down about 7% from its highs of the year, as the promise of guaranteed yields on U.S. government debt draws investors away from equities. Mortgage rates, meanwhile, stand at more than 20-year highs, weighing on real estate prices. “Investors have to take a very hard look at risky assets,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York. “The longer we remain at higher interest rates, the more likely something is to break.”Fed Chairman Jerome Powell on Thursday said monetary policy does not feel “too tight,” bolstering the case for those who believe interest rates are likely to stay elevated. Powell also nodded to the “term premium” as a driver for yields. The term premium is the added compensation investors expect for owning longer-term debt and is measured using financial models. Its rise was recently cited by one Fed president as a reason why the Fed may have less need to raise rates.Here is a look at some of the ways rising yields have reverberated throughout markets.Higher Treasury yields can curb investors’ appetite for stocks and other risky assets by tightening financial conditions as they raise the cost of credit for companies and individuals.Elon Musk warned that high interest rates could sap electric-vehicle demand, which knocked shares of the sector on Thursday. Tesla’s shares closed the day down 9.3%, as some analysts questioned whether the company can maintain the runaway growth that has for years set it apart from other automakers.With investors gravitating to Treasuries, where some maturities currently offer far above 5% to investors holding the bonds to term, high-dividend paying stocks in sectors such as utilities and real estate have been among the worst hit.The U.S. dollar has advanced an average of about 6.4% against its G10 peers since the rise in Treasury yields accelerated in mid-July. The dollar index, which measures the buck’s strength against six major currencies, stands near an 11-month high. A stronger dollar helps tighten financial conditions and can hurt the balance sheets of U.S. exporters and multinationals. Globally, it complicates the efforts of other central banks to tamp down inflation by pushing down their currencies. For weeks, traders have been watching for a possible intervention by Japanese officials to combat a sustained depreciation in the yen, down 12.5% against the dollar this year.”The correlation of the USD with rates has been positive and strong during the current policy tightening cycle,” BofA Global Research strategist Athanasios Vamvakidis said in a note on Thursday.The interest rate on the 30-year fixed-rate mortgage – the most popular U.S. home loan – has shot to the highest since 2000, hurting homebuilder confidence and pressuring mortgage applications. In an otherwise resilient economy featuring a strong job market and robust consumer spending, the housing market has stood out as the sector most afflicted by the Fed’s aggressive actions to cool demand and undercut inflation. U.S. existing home sales dropped to a 13-year low in September.As Treasury yields surge, credit market spreads have widened with investors demanding a higher yield on riskier assets such as corporate bonds. Credit spreads blew out after a banking crisis this year, then they narrowed in subsequent months.The rise in yields, however, has taken the ICE BofA High Yield Index near a four-month high, adding to funding costs for prospective borrowers.Volatility in U.S. stocks and bonds has bubbled up in recent weeks as expectations have shifted for Fed policy. Anticipation of a surge in U.S. government deficit spending and debt issuance to cover those expenditures has also unnerved investors.The MOVE index, measuring expected volatility in U.S. Treasuries, is near its highest in more than four months. Volatility in equities has also picked up, taking the Cboe Volatility Index to a five-month peak. More