Equities rise, bond prices fall on FEDs resolve to battle inflation
US Stocks rose, and prices of Treasuries declined further as investors continued to take in Federal Reserve’s intention to curb inflationary pressures even if it means larger interest rate increases. The S&P 500 rose 1.1% to 4,511.61, Nasdaq 100 went up 1.9% to 14,108.82 and DOW gained 0.74% to 34, 807.46.FED’s call for stronger actions to control inflation amid commodity supply shocks due to the war in Ukraine sent yields on US Treasuries rising to 40-year highs with the 10-year Bonds yield going up 2bps to 2.40%. Crude Oil prices rose on the likelihood of fresh sanctions on Russia over its invasion of Ukraine coupled with declining U.S. crude inventories. Consequently, WTI crude climbed 0.9% to $110.21 per barrel while Gold considered as a haven asset was at $1,920.95 an ounce. Investors are still concerned about growth due to the uncertainties surrounding ongoing peace talks even though the FED has continued to reiterate that the US economy is strong enough to deal with higher cost of borrowing.
10Y bunds moved yet higher on Tuesday to close at 0.505%, 3.5bps higher than Monday’s close. The selling continued as markets parse the increasing hawkishness from central banks with more Fed speakers pushing for half-point hikes. Peripherals moved lower as well but in much more muted fashion with yield on 10Y BTPs only a basis point higher at 1.931%; these open steady as do the benchmark bunds. Equities continue their resurgence with the Stoxx 600 up 0.18% at 08.15GMT having risen 0.85% on Tuesday.
As sale of OFZ remained forbidden, RGBI continued to rise. It gained 5% from 102.5 to 107.5, which is almost at February levels. 10Y RU YTM is up at 13.5, while RUBUSD gained 50 kopeks to 103.5. Evraz reported that the agent transferred the payment of coupon for Evraz 5.375% 2023 Eurobond. Tinkoff Bank also has paid coupon on its dollar-denominated perpetual notes. Also, CBOM has paid interest for CRBKMO 3 ⅞ 09/21/2026 in USD. RUSSIA 28 slid from 45 to 42, while RUSSIA 47 was flat at 23 level. Meanwhile NLMK, Russia’s largest steel company, said that it had successfully paid a coupon on its Eurobonds. However, they noted that bondholders from Russia did not receive payments as international clearers no longer settle transactions with Russia’s National Settlement Depository (NSD). NLMK said it was considering alternative ways to deliver coupon payments to bondholders based in Russia. A new round of sanctions is expected later this week after NATO and G7 meetings. Sanctions may include an oil embargo on Russia by EU and blocking Russia’s $130 billion gold reserves by US.
GHANA (+.375) up at the open ahead of an address by the finance minister on Thursday where he is going to detail how the government will address the economic challenges. Last weekend’s meeting failed to produce anything tangible as market expected some openness to approaching the IMF for assistance. KENINT opens flat as the Treasury asked Parliament to approve a $1.21 billion supplementary budget for 2021-22. The supplementary budget will see the fiscal deficit widen beyond the projected 8.1% of GDP amid some revenue misses.