Markets lower, focus on Fed’s rhetoric and corporates earnings
US equities were traded in red zone on Monday, as economic data made investors consider that Fed may take more time before cutting rates, while investors still wait for the corporates earnings results of many major companies this week. The Dow Jones traded lower 0.1% to 33,891, the S&P Index lost 0.6% to 4136, and the Nasdaq went down 1% to 11,887. Treasury yields went up dramatically to the highest in four weeks, with the yield on the 2-year note up to 4.48% and the yield on the 10-year note increasing 12 bps to 3.64%. US Dollar strengthened with DXY up 0.02% to 103.64. Today main focus of investors will be on speech of Fed’s chair Jerome Powell, with the main question whether his rhetoric will change after last week’s economic data.
Military actions continue in Ukraine, with Russian forces attacking Bakhmut, Liman and Avdeevka in Donetsk area. USA has plans to impose 200% tariff on Russian aluminum. On the Russian stock markets IMOEX ended Monday 1.1% higher at 2,272 level, while the RTSI traded up 0.4% to 1,007 points. On the bond space RGBITR (gov bonds) and RUCBITR (corp bonds) almost remained flat, ending +0.02% and 0.06%, correspondingly, with 10y benchmark yield at 10.35%.
European markets are traded mixed during today’s trading session, following weak data on industrial production in Germany on the one hand, and strong UK’s oil major company BP results on the other. On the stock markets, the DAX index in Germany traded this morning lower 0.02% at 15,342 level, while the CAC 40 in France is up 0.1% to 7,145 level, and the FTSE 100 in the U.K. is outperformer with +0.6% to 7,883 points. 10Y GILT and 10Y Deutsche Bundus yields went slight up, gaining 2bps and 1bps, correspondingly. Investors will wait this week for data on EU economic forecast, as well as German CPI and GDP data in the UK.
SSA opens relatively weak ahead of commentary from US fed Chair, Jerome Powell later today. The yield on the 10-year U.S treasury rose in Monday’s session above 3.6% for the first time in nearly a month as traders await remarks from Fed speakers that may shape views on the central bank’s rate path. The risk off in the space continued in yesterday’s session as ANGOLA (-0.25) led the slide with duration the most sold and NIGERIA (-0.125) closing up to 2pts lower on the day. GHANA (-0.125) traded in line with the rest of the space with macro the main driver.
The NTB secondary market closed on a positive note with average yields dropping by 5bps across the curve. Average yields across the medium end dropped by 20bps while average yields across the short & long ends of the curve, remained unchanged. Jun 8, 2023 saw some buying interest.
In the OMO secondary market, average yields closed on a positive note with average yields across the curve, dropping by 40bps. Feb 14, 2023 witnessed heavy buying interest.
The FGN bonds secondary market closed on a negative note with average yields across the curve rose by 1bps. Average yields on the medium & long ends rose by 5bps each. The short end however dropped by 20bps. The Apr 2037 bond was the worst performer.
**The DMO offered 2yr & 3yr Savings bonds. The auction will close on Feb 10, 2023 with settlement on Feb 15, 2023.