Optimism reigns on U.S. markets

Confident positive reigns on the markets, on the eve of J. Powell confirmed the early statements of many heads of the FED that the time to slow down the pace of the rate hike may come already at the December meeting, and the regulator does not intend to” overdo it with tightening …”. About 70% of traders expect the Fed to slow rate hikes to 50 basis points on next meeting, down from 75 basis points seen in the prior four Fed meetings. Stocks market added more than 3 points on this comment. The Dow Jones rose 2.18% to 34,589.24 points to enter bull market territory once again after taking its gains since its trough on end of September. The S&P 500 added 3.09% to end the session at 4,079.97 points, while The Nasdaq gained 4.41% to 11,468.00 points. DXY index which tracks the greenback against a basket of six other currencies, fell 0.2% to 105.705, extending Wednesday’s more than 1% drop. The index fell over 5% in November, its worst monthly showing since September 2010.

Ukraine said the risk remains that Russia will launch new missiles attacks against energy infrastructure. Six million people in Ukraine remain without electricity after Russia’s intensive attacks on the energy grid. Russia shelled overnight the southern city of Kherson, which Ukraine liberated in November with Russian military also trying to continue to advance in the Donetsk region. Russian stock market rose this Thursday morning as cheap valuations and surge in European natural-gas prices outweighed the economic risk related to international sanctions and the war in Ukraine. IMOEX was up 0.74% to 2,191 and RTSI was up 0.3% to 1,129. Precious metals producers Polyus and Polymetal were among the best performers on Thursday, along with Sberbank. Energy giants Gazprom and Lukoil traded lower together with Internet company Yandex. Russian rouble was lower this morning after closing November with a monthly gain amid signs of a draw in US crude stockpiles and ahead of OPEC+ meeting on output policy this weekend. USDRUB was up 0.16% to 61.15 and EURRUB was up 0.77% to 63.85. Investors are still waiting for details on plans for Russian oil price cap, but in the meantime USDRUB remains mostly rangebound between 60.50 and 61.50. Russian bond yields were higher this morning with 10-year local bonds yields up 2.5 bps to 10.135. In other news, the call-up of men to fight in Ukraine has left labour scarce in Russia putting some industries in distress. Up to a third of Russian industry may face a deficit of personnel, because of the draft, the most severe crunch since 1993.

Inflation in the EU slowed down: the preliminary estimate of the HICP indicator was 10% y/y (forecast: 10.4%) vs. 10.6% a month earlier, when record levels were recorded. Monthly dynamics is already negative: -0.1% mm vs 1.5% mm Among the countries, the highest rates remain in the Baltic countries: Estonia (21.4% y), Lithuania (21.4% y), Latvia (21.7% y). The minimum October HICP was recorded in France (7.1% y), Spain (6.6% y), Luxembourg (7.3% y) and Malta (7.2% y). In November, the largest contributor to the annual inflation rate in Eurozone added energy, followed by food and non-energy manufactured goods, followed by services. But, at the same time, it was the energy sector that decreased most noticeably on a monthly basis (-1.9% mm)

SSA’s run of firmness continues after Powell signalled a moderation of the pace of rate hikes as early as at the December FOMC meeting. The space traded firmer on Wednesday with GHANA (+.50) taking Moody’s downgrade in stride as the IMF team visits Accra for another round of talks. ANGOL (+.50) and NGERIA (+.375) also firmed as Brent recovered from overnight losses.

The FGN bonds secondary market closed on a slightly positive note as average yields closed lower by 3bps across the curve. Average yields on the short & medium tier dropped by 11bps and 5bps however, the long end of the curve closed on a flat note. The Mar 2025 bond was the best 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 as market was quiet with little activity.