The Fever in Rates Broke. What Ran Hardest Was a Cancer Vaccine

Hello. The long end, which had been pressing on everything for three days, got held down on Wednesday.

The 30-year Treasury yield first set a 19-year high intraday, then turned back after the US Treasury said it would at least double the size of its liquidity support buybacks in 10- to 30-year securities. The 30-year fell as much as 9 basis points to 5.19 per cent, closed near 5.20 per cent, and is down to 5.18 per cent today.

But technology did not come back. $SPDR S&P 500 ETF Trust(SPY)$ closed up 0.21 per cent and $Dow Jones(.DJI)$ 0.22 per cent, and most of that came from healthcare while tech kept being sold. One headline put it plainly: the tech sell-off resumed and cancelled out the relief in bond yields.

What ran hardest had nothing to do with rates at all.

$Moderna, Inc.(MRNA)$ closed up 176.97 per cent at US$174.38, touching US$176.66 intraday for a 52-week high, on 199 million shares — about 29 times its usual volume — taking its market value back to roughly US$69.6 billion. Its partner $Merck(MRK)$ closed up 12.60 per cent.

The catalyst was hard data. The personalised mRNA cancer vaccine the two developed together, intismeran autogene, given with Keytruda, met both recurrence-free survival and distant metastasis-free survival endpoints in the phase 3 INTerpath-001 trial, in patients with completely resected stage IIB to IV melanoma. It is the first time the mRNA platform has produced a phase 3 success in oncology.

One report noted it could be the first S&P 500 stock since 2008 to double in a single day.

The spillover ran through the whole chain. $BioNTech SE(BNTX)$ closed up 21.96 per cent, $Eli Lilly(LLY)$ 4.46 per cent, $AbbVie(ABBV)$ 2.72 per cent and Johnson & Johnson 0.85 per cent; in Hong Kong today WuXi AppTec is up 4.55 per cent.

It is worth being clear about what the data gives and what it does not. The endpoints met were recurrence-free survival and distant metastasis-free survival. Overall survival data has not been released.

The sell side was a good deal more restrained than the share price. Only two rating changes landed that day — Bank of America from Underperform to Neutral, William Blair from Market Perform to Outperform — and neither came with a price target. The consensus target from 23 analysts still sits at US$78.78 against a close of US$174.38, so the shares are already at more than twice the average target.

How much of the move was not revaluation also belongs on the table. Short interest is 13.62 per cent of the float, and short sellers lost about US$4.8 billion on the day. On fundamentals, revenue over the past 12 months was US$2.23 billion, down 27.6 per cent year on year, with a net loss of US$3.15 billion over the same period.

And management had been selling into the run-up — the chief executive sold about 499,000 shares on 5 August at US$57.52, a third of the current price. The stock gave back 6.27 per cent after hours.

The memory bill reached its third stop on Wednesday.

$Intel(INTC)$ closed down 4.02 per cent. A report said its GPU prices had jumped 48 per cent because of rising memory costs, and Wedbush warned about it — higher prices protect margin in the short run and push customers towards rivals over time, and Intel is still using price to win AI customers. Another piece of analysis was titled, bluntly, charging a premium for capacity still being built.

Line the three days up and the chain is complete. On 17 August the US government asked Apple to avoid Chinese memory and the whole memory chain rose that day. On Wednesday Xiaomi's second-quarter results showed net profit down 42.6 per cent year on year, with the company itself pointing at rising memory and flash contract prices squeezing handset margins. The same day, Intel's GPU prices went up 48 per cent. The money the upstream is collecting is being asked for, one stop at a time, further down.

The odd part is that $XIAOMI-W(01810)$ is rising anyway, up 3.13 per cent in Hong Kong today. Its shares are already down about 48 per cent over the past year — the bad news has been priced in faster than the fundamentals have deteriorated.

Retail supplied a two-day comparison. $Home Depot(HD)$ beat on both lines with its best comparable sales in four years, but only reaffirmed guidance, and closed down 0.12 per cent. On Wednesday $Target(TGT)$ supplied the other half: it also beat on both lines, and it raised both its full-year sales and earnings guidance, closing up 4.28 per cent at US$159.00 for a 52-week high, helped by a US$994 million tariff refund.

Reaffirming guidance bought nothing. Raising it bought 4.28 per cent.

Memory itself fell that day. $SanDisk Corp.(SNDK)$ closed down 3.50 per cent and $Micron Technology(MU)$ was roughly flat, down 0.39 per cent. The leveraged instruments pointed the same way for a second session: $Tradr 2X Long SNDK Daily ETF(SNXX)$ fell 6.90 per cent while $Tradr 2X Short SNDK Daily ETF(SNDQ)$ rose 7.21 per cent; $Direxion Daily Semiconductors Bull 3x Shares(SOXL)$ fell 6.48 per cent and $Direxion Daily Semiconductors Bear 3x Shares(SOXS)$ rose 6.47 per cent. Money is still cutting risk, not buying the dip.

The puzzle Nebius left the day before got its answer on Wednesday.

It had fallen 7.60 per cent the day before even though its own news — approval for the second phase of its data centre — was all good, and it was not clear then who was doing the pricing. On Wednesday morning it announced a proposed private placement of US$4.5 billion of convertible senior notes, upsized to US$5.0 billion when it priced that evening, alongside an US$800 million note-for-equity exchange. That is its third multi-billion-dollar convertible in under a year.

It fell as much as 14 per cent intraday and closed down 9.87 per cent. Where the money for the expansion comes from: it is borrowed. Short interest stands at 27.14 per cent of the float, and Michael Burry is still adding to his short.

The minutes of the July policy meeting came on Wednesday afternoon in the US: most members supported holding rates, some leaned towards a rise, and inflation risk has not cleared. That lines up with the voting at the 29 July meeting, which left the range at 3.50 to 3.75 per cent with three members arguing for a 25 basis point rise. Next up for the macro is the Jackson Hole conference next week, where Warsh appears as chair for the first time; Yangtze Optical publishes interim results on Friday.

Kuaishou reported on Wednesday and is down 11.32 per cent in Hong Kong today, close to a 52-week low. Revenue of RMB35.535 billion grew just 1.4 per cent year on year, against 3.4 per cent in the first quarter, and adjusted net profit fell 30.3 per cent. Kling AI, the business carrying the highest hopes, grew revenue more than 200 per cent — a quarter ago that was more than 300 per cent. What got marked down was not the growth rate but its slope.

$NVIDIA(NVDA)$ closed down 0.99 per cent, less than a week from results after the close on 26 August.

Rates broke their fever for a day and the money did not go back where it came from. What got revalued was not anybody's report card. It was a phase 3 read-out — and its consensus target still sits below half the share price.

The above is personal analysis, not investment advice.

💬 【Talking Point】

The memory bill has now reached three stops: Apple was told to switch suppliers, Xiaomi's profit fell 42.6 per cent, and Intel's GPU prices jumped 48 per cent. Would you rather own the side collecting on that, or the side that has already been marked down for paying it?

💰 【Bounty】

Drop your view in the comments and there are coins in it for you! 🎁

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