BoE Considers Negative Rates as First Negative Yielding Gilt Auction Holds

UNITED STATES

US stock market appreciated on Wednesday supported by hopes on further stimulus measures by the FED. Minutes that came out yesterday showed that FED was ready to give even more support to the economy over the medium term in case of additional outbreaks of the virus. The S&P gained 1.7%, Nasdaq rose 2.1% while the yield on 10Y USTs dropped by 1.3 bps yesterday and another 2 bps today already.

UNITED KINGDOM

The Bank of England representatives seems very dovish at the TSC yesterday. They believe that the QE parameters are the main point to focus in the near term, not the potential negative rates or even the first ever negative yielding gilt auction. The 10Y UKTs lost 2 bps in yield on Wednesday while the pound slipped 0.3%.

OIL

The oil market showed firm tone yesterday riding the wave of rising demand and falling supply. Futures on Brent and WTI gained 3.7% and 5% respectively and reached the highest levels since mid March.

ASIA

Despite the strong closure of US market last night, the Asian indexes were trading almost flat this morning: Topix is falling by 0.1%, Hang Seng is flat. The reason might be the criticism of Chinese government by Trump administration as the coronavirus blame game gathers momentum.

TURKEY

Turkey`s central bank might cut rates today by 50 bps or larger on today`s meeting (14:00 GMT+2), analysts predict. If that would be the case – it would be a 9th straight cut in a row. On another note, Turkey achieved a virus recovery rate of almost 75%. Turkish government bonds rose significantly on Wednesday adding 1-3 points pricewise.

SSA

In Sub Sahara region the yield on government bonds felt down significantly on Wednesday supported by rising oil prices. Ngeria 31 lost 40 bps in yield while Angola 29 lost around 50 bps.

RUSSIA

The Ruble appreciated against the major currencies on Wednesday (+1.9% vs USD) supported by general risk on tone as well as strong auctions placed my Ministry on Finance – it collected the total of RUB 170bn in 3 auctions (RFLB 6% 27, RFLB 29 and RFLBI 28). The government Eurobonds also appreciated, Russia 28 lost 4bps in yield yesterday.