Wall Street posts worst day of 2023 on higher rates fears

US equities finished sharply lower on Tuesday, as the uncertainty over Fed’s future rate hike decisions pressured the market sentiment. The Dow Jones lost 2.1% to 33,130, the S&P was down 2% to 3,997 and the Nasdaq dropped 2.5% to   11,492. As investors grappled with recent inflation data and Fed speeches, treasury yields went noticeably higher with 2-year note yield rising 10 bps to 4.72%, 10-year gaining 14 bps to 3.96% and the 30-year advancing 11 bps to 3.98%. US Dollar hovered near six-week high with DXY gaining 0.09% to 104.207. The economic calendar showed increased manufacturing activity, but still in contraction territory, as February PMI went up to 47.8. Existing home sales were down 0.7% m/m in January. Investors focus now turns to the release of the minutes from the Fed’s latest meeting later today. Traders on Tuesday were projecting Fed’s main interest rate would rise to peak around 5.35% in July, based on derivative market pricing.

US equities finished sharply lower on Tuesday, as the uncertainty over Fed’s future rate hike decisions pressured the market sentiment. The Dow Jones lost 2.1% to 33,130, the S&P was down 2% to 3,997 and the Nasdaq dropped 2.5% to   11,492. As investors grappled with recent inflation data and Fed speeches, treasury yields went noticeably higher with 2-year note yield rising 10 bps to 4.72%, 10-year gaining 14 bps to 3.96% and the 30-year advancing 11 bps to 3.98%. US Dollar hovered near six-week high with DXY gaining 0.09% to 104.207. The economic calendar showed increased manufacturing activity, but still in contraction territory, as February PMI went up to 47.8. Existing home sales were down 0.7% m/m in January. Investors focus now turns to the release of the minutes from the Fed’s latest meeting later today. Traders on Tuesday were projecting Fed’s main interest rate would rise to peak around 5.35% in July, based on derivative market pricing.

US equities finished sharply lower on Tuesday, as the uncertainty over Fed’s future rate hike decisions pressured the market sentiment. The Dow Jones lost 2.1% to 33,130, the S&P was down 2% to 3,997 and the Nasdaq dropped 2.5% to   11,492. As investors grappled with recent inflation data and Fed speeches, treasury yields went noticeably higher with 2-year note yield rising 10 bps to 4.72%, 10-year gaining 14 bps to 3.96% and the 30-year advancing 11 bps to 3.98%. US Dollar hovered near six-week high with DXY gaining 0.09% to 104.207. The economic calendar showed increased manufacturing activity, but still in contraction territory, as February PMI went up to 47.8. Existing home sales were down 0.7% m/m in January. Investors focus now turns to the release of the minutes from the Fed’s latest meeting later today. Traders on Tuesday were projecting Fed’s main interest rate would rise to peak around 5.35% in July, based on derivative market pricing.

Risk off sentiment continues in SSA as traders fret over the prospects of higher Fed rates. Higher U.S Manufacturing data pushed risk assets down yesterday with the space closing lower by up to 1.5pts. ANGOL (-1.10) again the underperformer, NIGERIA (-.0.50) also saw some fair share of selling. Attention now shifts towards the Fed minutes due today. Readout could reveal if more officials considered 50bps move.

The NTB secondary market closed on a slightly negative note with average yields across the curve, rising by 5bps. Average yields across the short maturities rose by 20bps while the average yields across the medium & long maturities of the curve remained unchanged. The Mar 9, 2023 bill witnessed some selling pressure.

In the OMO secondary market, average yields also closed flat. Average yields at the short and medium maturities remained unchanged.

The FGN bonds secondary market closed on a slightly positive note with average yields across the curve closing lower by 2bps. Average yields on the short, medium & long ends of the curve dropped by 1bps, 5bps & 2bps respectively. The Mar 2027 bond was the best performer.

**There will be NTB Primary auction on Wednesday  with a total of N263.50bn on offer across 3 tenors.