Angola rules out a eurobond sale this year

Despite data showing an increase in job openings in the US, which did not spur significant concern about inflation, the S&P 500 traded near record territory on Tuesday before retreating with only about a half-hour left in the regular trading session. The Dow Jones Industrial Average fell 0.3%, Nasdaq Composite advanced 0.3% while S&P 500 edged past its closing high of 4,232 with roughly an hour left of trading but could not hold the gains. It ended the day flat. It is worth nothing that since hitting that closing high on May 7, the index has essentially gone nowhere. With the S&P up more than 14% year to date. Investors are now waiting to see if higher-than-expected inflation will prompt the Federal Reserve to take actions that would lift bond yields. Higher bond yields would usually erode the value of future cash flows and bring stock valuations down. The focus remains on Thursday’s report about U.S. consumer prices, which may affect views on the likely timeline for the Federal Reserve discussions on tapering asset purchases.

In Europe, stocks are expected to open almost flat, with Euro Stoxx futures up 0.1% and Britain’s FTSE futures down 0.1% in early trade. The movement seen in UST yields have simply dragged European rates and Gilt yields lower. About 90% of QE buying in France and Italy is of government securities, but Greece and Portugal have seen the most support with 95-99% of buying in government bonds. That means QE has helped take down net bond supply with Bank of France QE exceeding net supply by 29 billion euros in the crisis. Portuguese buying has matched net supply while in Greece it has been about 2 billion euros more than net supply. For today our focus would be on supply with issuance from Germany (2050 bonds), Portugal (2037, 2031 bonds) and UK 2031 linkers. For buybacks, the BoE would buy GBP1.147bn of 7Y-20Y maturity Gilts.

Oil prices held firm after U.S. Secretary of State Antony Blinken said that even if the United States were to reach a nuclear deal with Iran, hundreds of U.S. sanctions on Tehran would remain in place. Also, an industry report pointed to another draw in U.S. crude inventories, reinforcing optimism around the demand recovery. The robust rebound has been underpinned by a demand recovery in the U.S., China and Europe, and there are signs the Covid-19 resurgence in Asia may be easing. The U.S. State Department loosened its travel warnings for nations around the world, which could pave the way for more airline travel. U.S. crude futures closed above $70 per barrel for the first time since Oct 2018 on Tuesday and last stood at $70.48, up 0.6%. Brent futures rose 0.6% to $72.66, staying near their highest level since early 2020.

Minister of Finance in Angola, Vera Daves has ruled out a Eurobond sale this year for the country and instead would focus on attracting foreign investment and carrying out reforms to diversify the economy of Africa’s second-biggest oil producer. She also indicated the country’s plan to address IMF’s program goals and is “highly optimistic” about the next evaluation of the program expected to take place on Wednesday.