Wall Street: J. Powell speech on focus
Modest dynamics observed Tuesday on the Wall Street, techs giants traded weaker. Investors are waiting for today’s speech by J. Powell, where additional nuances of the ongoing monetary policy may be announced. Dow Jones added 0.01% to 33,852.53 points, the S&P 500 declined 0.16% to end the session at 3,957.63 points, while the Nasdaq Composite fell 0.59% to 10,983.78 level. DXY index which measures the greenback against six peers rose 0.14% to 106.822 while UST 10Y benchmark yields increased 0.17% to 3.7441 level
The Conference Board in the US published on Tuesday amounted to 100.2 in November vs 102.5 and 107.8 points two months earlier. The current situation index continues to decline and continues to indicate that the economy has lost upward momentum towards the end of the year. Consumer expectations for the short term remained bleak – the likelihood of a recession remains elevated. Inflation expectations rose to their highest level since July, with gasoline and food prices being the main culprits. Household estimates of expectations fell to 75.4 points vs. 77.9 points in October, these are the lowest levels in a decade, and the assessment of the current situation this month decreased to 137.4 points against 138.7 points in October.
The EU proposed establishing a specialized court to investigate and prosecute Russia for war crimes, following renewed calls from Ukrainian President Zelenskiy to pursue Russia for the “crime of aggression”. NATO will meet for a second day in Romania after alliance condemned Russian President Putin for targeting vital infrastructure and pledged wide-ranging support for Ukraine, including fuel and generators. In the meantime, Russia resumed strikes on Ukraine’s energy infrastructure overnight, targeting a gas distribution point in Zaporizhizhia region. Russian stock market edged lower this Wednesday morning erasing the previous session’s gain as investors focused attention on this weekend’s OPEC+ meeting and the EU’s price cap decision on Russian oil. IMOEX was lower by 0.11% to 2,183, while RTSI was almost flat at 1,129. Shares of Sberbank, Norilsk Nickel, Yandex and Lukoil lost the most, while Gazprom and Detskiy Mir gained. Russian currency was slightly stronger at the open paring its steepest drop in a month as Brent snapped a four-day run of losses. USDRUB was lower by 0.13% to 60.80 and EURRUB was down 0.18% to 63.02. Russian bonds yields were mostly unchanged with 10-year benchmark bond yields down 2 bps to 10.11%. In other news, Russian international debt liabilities contracted by more than 25% in January – September 2022, Russian Prime Minister Mishustin said on Tuesday. According to him, the financial system of Russia remains stable, despite of Western sanctions.
European markets continue their bullish run as CPI continues show signs of easing across the euro area. German November CPI recorded -0.5% month-on-month against an expected 0.2% drop while the French equivalent came at the expected 0.4%. Bunds open steady after a volatile Tuesday that saw the 10Y yield drop as much as 12bps before paring to 7bps down at 1.922%. The Stoxx 600 opens firm after a similarly volatile session on Tuesday that ultimately closed with a 0.13% drop. On the data front, we have Italian CPI and the Eurozone CPI.
SSA opens on a firm note ahead of Powell’s speech before the Fed’s blackout period for December. The space closed in the green on Tuesday with oilers ANGOL (+.625) and NGERIA (+.625) rebounding from Monday’s weakness as Brent traded firmer throughout the session. GHANA (+1.125) again the outperformer but with duration more bid; it opens firmer still (+.25) even as Moody’s downgraded the rating two notches further into junk territory to Ca
The FGN bonds secondary market closed on a slightly positive note as average yields closed lower by 1bps across the curve. Average yields on the short & medium tier dropped by 3bps and 6bps however, the long end of the curve rose by 2bps. The Mar 2027 bond was the best performer while Apr 2037 bond was the worst performer.
The NTB secondary market closed on a flat note as yields across the short & medium tier of the curve remained unchanged. There was a marginal decline at the long end as yields dropped by 1bps.
In the OMO secondary market, yields remained unchanged across the curve.