FOMC minutes show ongoing rate hikes support
US equities finished mixed on Wednesday following the release of Fed’s February meeting that showed that nearly all Fed policymakers remained in favor of rate hike campaign despite colling of inflationary pressures. The Dow Jones lost 0.3% to 33,045, the S&P was down 0.2% to 3,991, while Nasdaq gained 0.1% to 11,507. Treasury yields were lower, as the yield on the 2-year note was down 3 bps to 4.7%, while the yield on the 10-year note declined 2bps to 3,93%. US Dollar held near a multi-week high with DXY flat at 104.537. In other economic news, mortgage applications fell for a second-straight week dropping by 13.3%. Today’s focus will be on the first revision of Q4 GDP, with economists expecting the headline figure to be negatively adjusted to 2.7% annualized q/q from initial 2.9% print. Initial jobless claims and Kansas Fed Manufacturing Activity Index are also scheduled to be released today.
On Wednesday, Deputy Foreign Minister of Russia Mikhail Galuzin noted in interview that Russia is ready to take a political and diplomatic path to achieving the goals of its special military operation in Ukraine. But as he sees the West was not displaying any readiness for peace initiatives on the situation in Ukraine. Last October, Ukrainian President Vladimir Zelensky issued a decree banning any talks with Moscow stating that he was not interested in interacting with his Russian counterpart Vladimir Putin. Russia’s equity market on Wednesday slightly decreased: IMOEX ended 0.07% lower at 2,212.40 and RTSI traded 0.03% lower at 929.43. Ruble traded mostly flat at 75 level vs USD. During this weekend Russian markets will be close for long holidays, Russia celebrates Defender of the Fatherland Day.
European markets are traded mixed during today’s trading session, following Fed’s minutes of February meeting and ahead of core inflation data in Eurozone. On the stock markets, the DAX index in Germany traded this morning higher 0.5% at 15,477 level, the CAC 40 in France is up 0.4% to 7,328 level, while the FTSE 100 in the U.K. dropped -0.3% to 7,910 points. 10Y GILT and 10Y Deutsche Bundus yields remained almost flat, decreasing 2bps to 3.64% and 1 bps to 2.52%, correspondingly.
SSA opens flat to firm as investors brace for a higher-for-longer rates scenario. The minutes from the last FOMC meeting released yesterday showed officials expect further interest rate increases to tame inflation. They also revealed that a few officials were open to a 50-basis point hike. NIGERIA (+0.25) positive at the open alongside ANGOL (+0.575); seems primed for a snapback after a three-day run of decline. In economic data, traders are looking forward to the US GDP and weekly jobless claim data, which are scheduled to be released today.
The NTB secondary market closed on a flat note with average yields across the curve, closing flat. Average yields across the short, medium & long maturities of the curve remained unchanged.
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 flat note with average yields across the curve closed flat. Average yields on the short & long ends of the curve dropped by 1bps & 2bps respectively while average yield on the medium end rose by 5bps. The Apr 2037 bond was the best performer while the Jan 2027 bond was the worst performer.
**Auction result: 91days- sold N9.96bn @ 3.00%; 182days- sold N10.21bn @ 3.24% & 364days- sold N243.33bn @ 9.90%.