UNITED STATES

US stocks traded about flat as the market braced for bank earnings for the first quarter (S&P traded flat while the NASDAQ and the DOW recorded marginal losses of 0.21% and 0.05% respectively). Wells Fargo and JPM kick off the reports which should give better indication of recession fears. Long awaited UBER finally came to the market with an IPO, opening the books today. The yield on 10Y USTs gained 3bps to close at 2.48%.

ASIA

Morning trading for Asian stocks was on a down note with the CSI 300 down 0.8%, the Hang Seng lower by 0.4% and the Topix losing 0.2%. Optimism surrounds China’s March trade figures set to be released today, with forecasts of a rebound in exports. With US-China trade talks appearing to wind down, Japan Prime Minister Shinzo Abe heads to Washington next week hoping to avoid tariffs on auto exports while President Trump seem bent on taking on Japan’s agricultural market to trim a $60 billion trade deficit.

UNITED KINGDOM

Prime Minister Theresa May renewed her effort to push through her compromise Brexit deal with in a bid to avoid participating in next month’s European parliamentary elections and called on MPs to move “swiftly” after the Easter recess to secure a deal. The delay however, means that costs continue  stacking up for UK companies some of which have spent millions of pounds preparing for chaotic no-deal split from the European Union; of note, Royal Bank of Scotland Group Plc and HSBC Holdings Plc are looking at Brexit bills of about 150 million pounds and 140 million pounds respectively. Yield on 10Y UKTs gained 3bps to 1.1477% while the pound lost slightly against the dollar to close at 1.3058.

EUROPEAN UNION

The proposed merger between Deutsche Bank AG and Commerzbank AG is facing strong skepticism from top European regulators with the ECB’s credibility at stake should they approve the merger and the merged bank runs into trouble. This will prove to be some balancing act as ECB President Mario Draghi encourages consolidation of banks citing Europe’s overcrowded banking system. The yield on 10Y DBRs gained 1.5bps to -0.0103% while the Euro traded marginally lower against the dollar at 1.1253.

TURKEY

In Turkey yesterday the day was marked by a heavy sell-off in credit, the sovereigns closed 1-2 points lower with TURKEY 47 seen offered at 77 are this morning, CDS added 35bps. Banks led the fall, down 1pt on average for Senior and 1-2pts for subs. The move came of the back of another fall in the government foreign currency reserves (down another almost $2bn), as well as the market uncertainty about the effectiveness of the newly released government plans to inject fresh capital into the state-owned banks and oversee the formation of two funds to take on some of the sector’s bad loans. Despite this being the largest financial aid to the Turkish banking sector from the government in 18 years, the investors remained sceptical on its effectiveness, given that the program remained unclear on whether the capital injection would address the current problem loans or if it will be used as a prerequisite for future lending at unfavourable terms for the banks, which in turn might create further asset quality and profitability problems. The lira was also under pressure on Thursday, slipping 0.8 per cent against the dollar to TRY 5.72.

RUSSIA

Baring Vostok founding partner Michael Calvey was yesterday placed on house arrest in a seeming easing of the prosecution of one of Russia’s largest foreign investors. His fraud case had kindled investor fears in the already-uneasy investment climate. The ruble gained marginally to close at 64.57 while RUSSIA 47 also closed higher at 101.81.

MIDDLE EAST

In MENA news, Fitch yesterday affirmed Kuwait’s credit rating at AA with stable outlook while Egypt announced their potential plans to issue their first Panda, Samurai, Sukuk and Green bonds in the next fiscal year, starting in July, having raised $6.2bn already this year for USD and EUR issuances. EGYPT bonds sold off this week, with the new EUR EGYPT 31 down 1.5-2 points, despite some positive remarks from the financial minister Maait, who in an interview said that Egypt is in talks with the IMF on a new non-financial program, after the last $12bn loan of the current programme is disbursed in June. EGYPT July-Feb Budget Deficit also improved to 4.9% vs the 5.8% in the previous year. GCC markets in general were weaker yesterday, in line with the broader EM weakness as well as affected by the heavy selling in the newly issued ARAMCO bonds, which bonds are down as much as 3pts (ARAMCO 49s) from the highs. KSA was 3-7bps wider spread wise, Qatar was slightly better, adding only 3-6bps in spread, OMAN was also seen better offered, down 30-50c on average, although some bids were visible in the long end of the curve, mainly 27/47/48 maturities.

LATAM

Cautious optimism is pervading Brazilian business circles since the election of Jair Bolsonaro as president and the subsequent appointment a free-markets man, Paulo Guedes as economics minister. Many sectors have reported health earnings including state owned companies Petrobras, Electrobras and Oi which recorded a combined 100% increase in profits in 2018. The market has also rallied with Bovespa touching a historic 100,000 points in March. Yield on Brazil 47 gained 4bps to close at 5.7714%.