What's causing the sudden scare
Treasury yields moved 3-6 bps lower after the US holiday, oil is down $1.26 and equity futures are falling.
Why? There's a surge of interest in B.1.1.529, which is a new covid variant identified in South Africa. It's also been identified in Botswana and Hong Kong. Here are some reasons that virologists are worried:
1) South African cases have spiked
It looks like a little spike but it's been sharp. Cases are up 321% week over week.
2) The provincial data is much worse
This is a map of Gauteng, which is the northern province at centre of the South African outbreak. You can see an uptick in case positivity in early November that's spreading and intensifying.
3) The variant is crushing delta
Virus sequencing in Guateng shows that it's rapidly taking over from delta. Note the blue sliver at the extreme right of the chart.
4) It's already likely widespread
Other provinces are increasingly showing this variant taking over and 100% of the most recent batch of 77 samples from Guateng were this variant. The mutation also shows up vaguely in PCR tests and those are showing an increase in other provinces. A travel-related case to Hong Kong also argues for wide spread.
5) The variant has 32 mutations
The virologists who have looked carefully at the variant are worried about the combination of mutations. From other variants, we know that these mutations are often associated with:
- higher transmissibility
- immune escape
- resistance to neutralizing antibodies
- increased infectivity
The big worry is vaccine escape but there's no news along those lines yet. In briefings in the days ahead, how the variant infects and affects vaccinated people will be a key question. About 29% of South Africa is vaccinated.
Here's more on this from Professor Christna Pagel. The Guardian also has more.
The reason not to be overly concerned is that we've been down this road before. Many variants turned out to be not as bad as feared, including delta. But it's certainly worth watching.