New Covid fears embraced the markets

U.S. markets finished Friday session higher as investors focused on FOMC members speeches about less hawkish monetary policy on this year. Dow Jones added 153 points or 0.5% to 34,347, the S&P 500 finished little changed and the NASDAQ Composite fell 59 points or 0.5% to 11,226.4. For the week, the Dow added 1.8%, the S&P 500 increased 1.5%, and the NASDAQ lifted 0.7%. On the bonds market benchmark UST 10Y reached 3.6314% from its U.S. close of 3.702% on Friday. The two-year yield, which tracks traders’ expectations of Fed fund rates, touched 4.4278% compared with a U.S. close of 4.479%. Markets are reacting rather nervously to the situation in China, where protests against tough anti-COVID measures intensify in a number of major cities, including Beijing and Shanghai. Negative sentiment dominates not only in China markets but also in EU, Japan, Australia and South Korea. During this morning Dow Jones Futures Dow Jones were down 0.62% to 34,144, S&P 500 Futures fell 0.8% to 3.998.50 level, while Nasdaq 100 Futures were down 0.93% to 11,676.

Ukrainian President Zelenskiy told Ukrainians to prepare for more Russian strikes in his nightly address, saying “as long as they have missiles, they will not come down”. Russian troops continued shelling residential infrastructure and houses in the city of Kherson after they were forced to retreat following a Ukrainian counter-offensive, according to the reports by the Ukrainian military. Russian forces also struck areas around Bakhmut and Avdiyivka in the east, while focusing offensive efforts on the Lyman region of Donetsk. Russian stocks market was lower Monday morning, as a wave of unrest in China hurt risk assets and pushed the price of oil to the lowest since 2021. IMOEX was lower by 0.79% to 2,178 and RTSI dropped by almost 1% to 1,130. Yandex was the biggest loser, dropping by 4.1% after the Internet Company announced potential changes to ownership. Energy giants Novatek and Rosneft Oil also declined, while electricity generator RusHydro gained before reporting earnings. Russian rouble lost at the open with USDRUB up 0.23% to 60.73 and EURRUB up 0.39% to 63.31. Russian currency is expected to weaken by the end of the year, as the country’s trade surplus is set to shrink fast amid EU oil embargo, price cap and the risk of slowing global oil demand. Russian bond yields stayed flat at the start of the week with 10-year benchmark rouble bonds holding above 10% at 10.08%. In economic news, the slippage of the nominal income of the Russian federal budget remained unchanged in October at around 4% from a year ago.

EU markets opened lower on Monday as investors concerns about the growth perspective of China economic due anti-COVID protests. This morning the DAX futures contract in Germany traded 1%lower at 14,387 level, the FTSE 100 futures contract in the U.K. fell 0.58% to 7,442 points, while CAC 40 futures in France traded 0.92% lower at 6,650. Investors will also be focusing on C. Lagarde’s speech at the European Parliament later Monday, ahead of the release of Eurozone inflation data on Wednesday. Inflation in the Eurozone jumped to 10.6% in October, more than five times the ECB target of 2%. The regulator raised rates by a record 75 basis points at its last two meetings, but there is uncertainty over whether the central bank will raise rates by 50 or 75 basis points at its December 15 meeting.

GHANA (+.50) leads the space at the open following headlines on restructuring on Thursday and Friday; the curve whipsawed back and forth between losses and gains on Friday before closing just higher (+.125) although duration was heavy. Short end getting most of the early bid in particular the 26s and March 27s. The rest of the space opens mostly lower on soured risk sentiment as protests erupt in China over COVID lockdowns. KENINT (+.125) opens firm however.

The FGN bonds secondary market closed on a positive note as average yields closed lower by 2bps across the curve. Average yields on the short & medium tier remained unchanged however, the long end of the curve dropped by 3bps. The Apr 2037 bond was the best performer while Apr 2049 bond was the worst performer. The NTB secondary market again, closed on a flat note. Average yields remained unchanged across the short and Medium tier of the curve. The long end dropped marginally by 1bps. In the OMO secondary market, yields closed flat across the curve.

**The CBN held its Primary Market Auction and sold N213 billion across three maturities with stop rate on the 364-day bill closing at 14.84%.