Treasury yield on the highest level since 2008. Dollars rally is continue
US Benchmark 10-yesrs treasury jumped at 7 basis points to 4.015% on Wednesday as investors were rattled by Federal Reserve hawkishness and concern over potential Japanese sales of US government debt. Treasuries are headed for their biggest annual loss since least 1973. The US dollar rose to a record high against the other top currencies while DXY index rose at 0.41% to 114.65 level. Meanwhile S&P 500 index were down 0.79% to 3647.29 this morning, Nasdaq 100 were 1.19% lower at 11270 lvl., and futures tied to the Dow Jones Industrial Average had slid 0.60%.
Both the S&P 500 and Dow stock indices closed lower for a sixth straight session on Tuesday, marking their worst streak since February 2020. S&P 500 closed at a fresh low for the year at 3,655 points, while the Dow ended the day in bear market territory, down over 20% from its January high.
Russia has declared a victory in a series of “referendums” in Ukraine and moved to annex a large chunk of occupied Ukrainian territory after a string of military setbacks. The European Union on Wednesday denounced the outcomes of “illegal” referendums, and the United Nations Secretary-General Antonio Guterres condemned the ballots as a “violation of the UN Charter and international law”. The declaration by Russia marks a new escalation in the war and the spiralling conflict between Russia and the US and its allies. Russian troops don’t fully control the territory of any of the four regions where the votes were held, and fighting continues in all of them. Russian stock market continued to recover this Wednesday from a five-year low as gas prices in Europe jumped after Gazprom said it may cut off supplies via Ukraine. Both IMOEX and RTSI were up around 1% and are trading at 1,953 and 1,054 respectively. Gaz producers Gazprom and Novatek were the biggest contributors to a rise along with energy giant Lukoil and internet company Yandex. Russian rouble was mostly flat today after Tuesday’s advances partially erased Monday’s decline. USDRUB is currently up 0.07% at 58.53 and EURRUB is down 0.41% to 55.85. An expectation of new sanctions is contributing to rouble strength, as people get rid off US Dollars and Euros due to the risk of foreign-currency accounts being frozen, some analysts suggest. The yield on the Russian 10-year bond fell sharply to below 10% and is currently trading at around 9.86% after hitting a five-month high of 11.6%. After a military mobilization and escalation in Russia-Ukraine conflict triggered a sharp sell off in Russia stocks, local investors have switched into fixed income contributing to the move.
European shares slid 1% on Wednesday, in line with a sell-off in Asian markets, as an intensifying energy crisis in the region and the relentless surge in global bond yields fuelled worries about a recession. London’s FTSE 100 index dropped 1.4% after the International Monetary Fund and ratings agency Moody’s criticised Britain’s new economic strategy.
Germany’s DAX index lost 1.2%, taking cues from Wall Street, which sank deeper into a bear market overnight. All sectoral indexes on STOXX 600 fell, with the economy-sensitive oil and gas, basic resources, retailers and banks sectors down between 1% and 1.8%. At the same time natural gas prices in Europe surged after Russia said it may cut off supplies via Ukraine, the last route still delivering the fuel to western Europe. Benchmark futures rose as much as 14%, jumping for a second day. The warning ratchets up the energy conflict with Europe, coming just after major leaks were reported on the Nord Stream pipelines that European authorities are calling an act of sabotage.
SSA opens weaker with yesterday’s early uptick ultimately failing to find support. The early firming faded as the session wore on as rates resumed their ascent. IVYCST (-1.75) and SENEGL (-1.75) among the underperformers as EUR-issues weighed down the respective curves; both open half a point down. ANGOL (-.75) leading the slide at the open.