Moderna Cancer Vaccine Success Sends Shares Soaring… US Treasury Yields Surge, Raising Fears of a '2007 Financial Crisis' Warning Sign

This is the first such late-stage trial success, and it drew a fervent market response, with Moderna's stock at one point surging more than 100% intraday. This is expected to have a positive impact across the pharmaceutical and biotech industry as a whole.

With the patent on the immuno-oncology drug Keytruda scheduled to expire in 2028, biosimilar companies are actively working to secure technology related to Keytruda. A direct application of mRNA vaccines to biosimilars is difficult for now, but expectations are still influencing the market. This trend raises the likelihood of the pharmaceutical and biotech sector forming a market-leading rally.

The US 30-year Treasury yield broke through 5.3%, hitting its highest level since 2007. This goes beyond the Fed's rate decisions and is emerging as a larger issue about the cost of government borrowing in the market. Expectations of a soft economic landing and prolonged tightening are linking to the burden of Treasury supply, and a surge in bond issuance by AI companies to raise large amounts of capital is also pushing yields higher.

Japan's 10-year government bond yield reached 2.95%, hitting a 30-year high. If Japanese capital flows back into Japan as the Bank of Japan shifts its monetary policy, a large volume of US Treasury selling could emerge. This raises the likelihood of US Treasury yields climbing again, which would feed into higher US mortgage rates and raise concerns about a decline in consumer spending.

Fiscal deficits and an oversupply of government bonds are being cited as the main causes of rising long-term yields. Analysts argue that Fed rate cuts can affect short-term yields but struggle to rein in long-term yields. If rates are cut, the gap between short-term and long-term yields could widen, which could push up mortgage rates and deepen turmoil in the US market.

In the past, the market tended to follow the Fed's moves, but now that dynamic has changed considerably. As the bond market pushes Treasury yields higher, it increasingly undermines or leads the Fed's policy. This shift suggests the bond market's influence has grown.

There are concerns that investors may push back against the government's Treasury issuance strategy by selling Treasuries in large volumes. Such mass selling could drive bond prices down and yields up, compounding market turmoil. The government and the Fed are expected to watch 30-year Treasury yield movements closely and stay alert to market conditions.

Two weeks ago, during the Middle East crisis, the probability of a rate hike in September, which had reached 68%, has fallen to the 30% range. This reflects a judgment that premature rate hikes could lead directly to recession, given price stability and slowing employment. A cautious approach from the Fed is called for.

Chair Jerome Powell mentioned discussions about abolishing the dot plot and reducing the number of FOMC meetings from eight a year, citing the 1935 precedent of four meetings a year. However, fewer FOMC meetings would make a swift response difficult if price or employment data deteriorated. This has raised concerns that it could add to market uncertainty.

Bank of America's chief semiconductor analyst, Vivek Arya, issued a buy rating on NVIDIA. NVIDIA is currently valued at a 34–50% discount to its fair value, and it is expected to generate more than $100 billion in free cash flow for fiscal 2026. The analysis holds that its massive cash generation capacity can sufficiently absorb AI-related risks.

NVIDIA is pursuing a financial platform that would allow lending against its GPUs as collateral. This is expected to encourage companies to use more NVIDIA GPUs, leading to higher sales. It is also raised as a possibility that NVIDIA could strengthen its dominant position and increase shareholder returns through its free cash flow.

NVIDIA's abundant free cash flow is positive, but some judge that the risk factors are larger. Because signals resembling the current financial crisis are being detected, some have suggested that investors considering a new position in NVIDIA should take a cautious wait-and-see approach for now.

If GPU recovery becomes impossible, there is also a chance the problem spreads into a financial crisis, so caution is required. Ultimately, the fact that GPUs lose value as they age is a risk factor.

It is interpreted as short-term noise, and a conservative defensive mechanism is expected to be in place.

Amylyx succeeded in a Phase 3 clinical trial of a treatment for GLP-1-induced hypoglycemia. Amylyx, whose stock had fallen sharply after the failure of its ALS treatment, is likely to regain attention in the market with this trial success. If commercialization happens next year and is reflected in revenue, the stock trend is expected to remain positive for the time being.