German bond yields hover near two-month low at 2.95%, surging inflation to 3.2% strengthens ECB rate hike expectations
- The yield on Germany's 10-year government bond hovered around 2.95%, close to the two-month low of 2.93% reached the previous week, as oil prices retreated and signals for resolving the Middle East conflict remained mixed.
- The US President and the Israeli Prime Minister gave differing accounts of their phone call on the Lebanon conflict, with the US urging a ceasefire while Israel's stance remained ambiguous. Previously, there were reports that Iran had suspended talks with the US and demanded an end to the fighting in Lebanon, but the US claimed that negotiations were progressing rapidly.
- Investors also digested eurozone inflation data: the inflation rate rose to 3.2% in May, the highest since the end of 2023. Core inflation was 2.5%, and the services sector inflation stood at 3.5%, indicating that price pressures are spreading.
- The market currently expects the ECB to raise interest rates by 25 basis points next week, with a possible two hikes this year. However, ECB officials have warned against overcommitting, while another official believes a further rate hike after June is possible.
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BUZZ-Revolution Medicines stock drops due to concerns over pancreatic cancer drug data
On October 8, Revolution Medicines (RVMD.O) shares fell 8.1% in afternoon trading to $185.91. RBC Capital Markets stated that the share price decline appeared to be driven by the latest U.S. Food and Drug Administration (FDA) review documents regarding the company's pancreatic cancer drug Rasonque, particularly the disclosure of objective response rate data for specific RAS mutation subgroups. RBC pointed out that overall survival, rather than objective response rate, is a more meaningful indicator of efficacy, and that the sell-off overlooked Rasonque's broad activity across a variety of RAS mutation subgroups. RBC stated: "While we acknowledge that today's share price decline takes place against the backdrop of overall weakness in the biotech sector, we still believe that the market's reaction to the FDA review documents is an overreaction, given that the drug was approved on the basis of highly clinically meaningful efficacy and has received positive feedback from physicians." Including intraday fluctuations, the stock has more than doubled year-to-date. (Note: For the convenience of non-English speakers, Reuters has automatically translated its reports into several other languages. Automated translations may be inaccurate or lack necessary context; Reuters does not guarantee the accuracy of these automated translations and provides them only for reader convenience. Reuters does not accept liability for any damage or loss arising from the use of automated translation features.)
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