US stocks were mainly in the green with the NASDAQ and S&P gaining 0.19% and 0.10% respectively. The DOW however, under pressure from Boeing (-4.44%), lost 0.32%. Washington is considering tariffs on $11 billion of EU products in a move threatening to worsen trans-Atlantic trade relations. The Trump administration, citing the World Trade Organisation’s findings that EU subsidies to Airbus were illegal, is proposing tariffs on wide-ranging goods from passenger helicopters to cheese and wines. The yield on 10Y USTs closed at 2.52%.
Asia stocks followed their US peers trading in the green with NIKKEI +0.10%, HANG SENG +0.31% & CSI 300 +0.60%. This was on the back of gains from energy producers as oil continued its rally (+1.08%) heading to its highest level since October.
Prime Minister Theresa May heads to Berlin and Paris today pressing for a short Brexit delay until June 30th when she meets Angela Merkel and Emmanuel Macron. While some in her party are pushing for her ouster over her preparations for Tory participation in the next month’s EU parliamentary elections and her insistence on a compromise Brexit deal, the House of Lords passed the bill preventing a no-deal divorce. The yield on 10Y UKTs gained marginally to 1.1142% while the GBP gained slightly against the dollar to close at 1.3061.
EU diplomats are said in turn to be settling on the idea of offering an extension in exchange for commitments from May that she — or any successor — wouldn’t disrupt EU business. The Euro gained slightly against the USD to close at 1.1263 while the yield on 10Y DBRs gained 0.1bps to 0.0055%.
Lack of consensus on additional sanctions from US lead Russian ruble to significant gains on Monday, currency appreciated by 0.7% to 64.88 per USD. Eurobonds traded mostly flat, RUSSIA 47 remains at upper 100 handle, there were no significant movements within corporates as well.
Israelis vote today with current PM, Benjamin Netanyahu facing indictment for corruption charges and a very strong challenge to a fifth term in office. His comments on annexing parts of the West Bank risk any possibility of a two-state solution with Palestine.
In KSA news, Aramco’s debut bond sale continues to attract investors with investor orders reaching $85 billion on Monday. The bond, rated A by Moody’s, includes a clause allowing investors to get their money back should the Saudi government take over control of the group.
Selling activity of Argentina’s dollar-denominated sovereign debt has pushed up its yields, deepening the country’s borrowing pressures. Yield on the 3Y April 2021 bond climbed to 12.188%, while the 10Y bond rose 10.214%. The selling comes as Argentina is fighting on two fronts – spiralling inflation at 50% YOY and the worst performing emerging market currency this year, the peso, which has dropped 16 per cent against the dollar.