New US-China tenstions over HK

UNITED STATES

The S&P closed above 3000 (+1.5%) on Wednesday for the first time in 3 months supported by hopes of a faster economic recovery and despite the new route of US-China tensions over Hong Kong. President Trump‘s administration said on Wednesday that HK is no longer politically autonomous from China, which could spell dire consequences for the Special Administrative Region’s special trading status with the US. The yield on 10Y USDs remained almost unchanged at 0.69% level.

ASIA

Hong Kong is underperforming this morning (-1.6%) as the protests in the city continues. Chinese currency fell by the most in three weeks while Chinese officials warning the US that the ability to strike back “should not be underestimated”.

OIL

The oil prices corrected down on Wednesday (Brent -1.1%, WTI – 3%) after the rising on Tuesday supported by the news on deeper production cuts from Russia.

EUROPEAN UNION

European sovereign bond appreciated on Wednesday while a spread between 10Y BTPS and Bunds fell below 200bs for the first time in almost two months. The German CPI data that is coming today (14.00 GMT+2) is expected to show the slowing trend.

RUSSIA

The weekly MinFIn auctions showed no record this time, they were only able to sell RUB 78bn of new OFZs yesterday. The Ruble weakened on Wednesday against the USD (closed above 71) while the sovereign Eurobonds continued growing – the 2Y yield lost 6.3 bps yesterday.

SSA

While most of the experts expected Kenya to cut rates by 25bps on Wednesday – that did not happen. KENINT issues remained almost unchanged yesterday. NGERIA and ANGOL bonds traded slightly lower on Wednesday affected by oil depreciation. On another note Zambia has selected French advisor firm to help them with restructuring debt. Part of the plans includes a refinancing of national Eurobonds.