UNITED STATES

US stocks rose for a third day running recording gains of 0.84% for the DOW, 0.97% for the NASDAQ and 0.89% for the S&P. Strong earnings from Cisco and Walmart coupled with solid housing data for April boosted shares in the face of mounting trade tensions. This comes as China downplayed chances for further trade talks despite Treasury Secretary seemingly suggesting that talks were still going on saying American officials “most likely will go to Beijing at some point.” Yield on 10Y USTs was up 4bps to 2.386%.

UNITED KINGDOM

Theresa May took a major step to leaving office when the beleaguered prime minister agreed that she will set out a timetable for her exit in June. This was announced by the chair of the powerful 1922 Committee, Graham Brady, after he and other Tories met her behind closed doors. In a joint statement with May, the 1922 Committee stated that the Prime Minister is “determined to secure our departure from the European Union” and she will try one last time to get the deal over in Parliament. Contenders to replace May have already started campaigning with former foreign secretary Boris Johnson being the latest to throw his name in. The market is bracing for more political upheaval with chances that a hardline Brexiteer will replace her. The pound weakened closing at $1.2798 and in line for its longest losing streak against the euro while yield on 10Y UKTs gained slightly to close at 1.0731%.

EUROPEAN UNION

Deputy Primi Minister Luigi Di Maio stepped in to calm markets after comments from his coalition partner Matteo Salvini roiled markets earlier this week. He said the government is committed to rein in the debt load echoing what Finace Minister Giovanni Tria had said earlier that “we are committed to meet our targets.” Salvini remains on the offensive however, Italy needs to follow what Trump is doing on tax cuts – “ignoring all limits, constraints, doubts.” Germany’s 10-year yield gained slightly closing at -0.958% while the euro lost slightly to close at $1.1174.

ASIA

Asian stocks were mixed in afternoon trading with Japan’s Nikkei 0.97% up while the Hang Seng and CSI slid 1.15% and 1.94% respectively. The CSI was particularly hit with the executive order on Chinese telecoms taking effect on Thursday as the trade tensions escalate. China itself, reduced its holdings of U.S. debt in March by about $20.5 billion to have its lowest holding of US debt in two years as trade tensions continue. The worry now is that China might use its status as the world’s No. 1 holder of US debt as a negotiating tool. The editor-in-chief of a Chinese state-paper, The Global Times, had earlier tweeted that Chinese scholars were looking at ways to sell off Treasuries. The decision can only be considered as a nuclear option as it has the potential to wreak havoc on the Chinese economy as well.

TURKEY

Turkey will reintroduce a 0.1% tax on some foreign-currency transactions in a bid to increase budget revenue. This follows a budget balance deficit in April of TRY18.3 billion – the April 2018 figure was TRY2.8 billion – which was largely attributed to declines in budget revenues. Tax revenues remained weak amid weak domestic demand with an annual increase of on 8.3% versus a 13% growth in budget expenditure over the same period. The tax however, risks raising fears that the government is manipulating markets especially given the currency crunch before the March elections. The lira traded weaker to the dollar closing at 6.0454 while yield on TURKEY 47s rallied to close at 79.092.

LATAM

The shadow of former president Christina Fernandez de Kirchner continues to hover over the Argentinian political landscape with analysts thinking her recent book launch is part of her election campaign. Having had a sustained period of silence, she returned to a rapturous reception at the launch of her new book Sinceramente (Sincerely) which has become a bestseller this year with some 300,000 copies sold in two weeks. Commenting on the book Ms Fernandez said it is a “retrospective reflection” intending at generating debate about how to fix the country’s problems and takes some shots at the incumbent Macri in the book. Macri has not commented as he deals with an edgy market. ARGENTINA 47s have traded in the mid 66s in the week while the peso was trading 44.76 to the dollar.

RUSSIA

Russian Railways pulled off its green bond issuance – Russia’s first – with the books oversubscribed about 3 times to the tune of about 1.4 billion euros despite several green investors having been concerned enough about the company’s ESG not to participate. The 8-year 500-million-euro bond was sold with a yield of 2.2% and re-offer price is sitting at about par. Both RUSSIA 35s and 47s traded up to high 103 handle while the ruble was little changed to the dollar at 64.6324 at close yesterday.

SSA

Following the Kenya issuance, it was a positive day for SSA with buying seen in Nigeria, Ivory Coast, and Angola. The new KENINT traded ok given the recent market context, with 32s preferred over the 27s, contrary to Ghana tenors a few months ago. In Nigeria, the shares of MTN Nigeria Plc was listed on the Premium Board of the Nigerian Stock Exchange. The firm confirmed 20.4 billion ordinary shares to be listed at a value of N90/US$0.25c per share, taking their market capitalization to N1.8tn/US$5bn. As at close of the trading window yesterday, the shares had added 10% in value to reach N99 per share.  With US-China trade escalation set to drive risk markets weaker today, will likely open the complex 5 wider from last night’s close.