US stocks mixed; bonds yield’s continue to rise on inflation risk
US Treasuries yields rose further while equities saw mixed performance as inflation linked economic risks and FED’s tightening monetary stance continued to be a major concern for investors. The S&P 500 rose 0.51% to 4,543.06, DOW went up 0.44% to 34,861.24 while NASDAQ 100 fell 0.16% to 14,169.30. The yield on 10-year UST scaled above 2.50% as it rose 3bps to 2.51%. Oil prices dropped as China’s aggravating Covid virus re-emergence whipped up concerns about demand in the world’s biggest importer of crude oil. Consequently, brent crude fell 3.6% to $116.30 per barrel while haven assets like Gold beat a retreat by dropping 1.2% to $1,934.20 an ounce. Meanwhile, peace talks between the Ukrainian and Russian negotiating parties are set to reopen this week as President Joe Biden tried to reiterate that the U.S. isn’t seeking regime change in Moscow. Coming up this week, US President is due to release 2023 budget later today and US GDP data is expected on Wednesday while U.S. jobs report comes out on Friday.
Bunds opened yet weaker following Friday’s selling which saw the 10Y close at 0.587% (+5.5bps). The selling spilled over from treasuries led by front end as analysts expect the Fed to hike aggressively; the benchmark bunds were trading at 0.607% at 07.10GMT. Peripherals also sold but to a comparatively more muted extent as risky assets were supported by suggestions that Russia may focus on just Eastern Ukraine; 10Y BTPs which closed at 1.993% (+3bps) traded as high as 2.042% at 07.40GMT. Equities open firmer having just managed to claw back to gains on Friday; the Stoxx 600 closed 0.10% up and was trading 0.63% firmer at 07.40GMT.
All Russian stocks and bonds have resumed trading on MICEX, but short selling is still not allowed while Eurobonds section is still closed. IMOEX is trading lower today and is currently around 2460, which is 3.6% lower. Russia 28 is up at 37, while Russia 47 is flat at 18. Corporate bonds are trading lower with LUKOIL 3 ⅞ 2030 down at 52. RUB currency has gained value over the last week with USDRUB down from 113.5 to 94. A new round of talks between Russia and Ukraine will be held in Istanbul on Tuesday and Wednesday this week with Zelenskyy ready to recognize the neutral status of Ukraine. At the same time, Zelenskyy has emphasized that the issue of the independence of Crimea and Donbas should be determined at a referendum. While German Chancellor Olaf Scholz says that Berlin is ready to refuse deliveries of coal and oil from Russia this year, other countries such as India and China are increasing their purchases of Russian oil. The main reason being is a huge discount for the Russian crude.
A somewhat firm close to the space last week. ZAMBIN wrapped up last week seeing some demand at the lows following the publication of the DSA, as investors look forward to IMF and its potential restructuring in focus. GHANA also closed the week looking firm on the back of its GHS3.5b expenditure cuts and the parliament’s expectation to pass the e-levy by end March.NGERIA seemed to be under pressure from the flows of its new issue last week as we saw the new paper (NGERIA 6 ⅛ 09/28/2028 REGS) go as low as -2pts below re-offer before showing signs of recovery and closing the week c.-1pt from re-offer.