UNITED STATES

US stocks slid back in the red with the DOW -0.39%, the NASDAQ -0.45% and the S&P -0.28%. Minutes for the Federal Open Market Committee’s latest meeting indicated that members agreed to maintain the current policy for some time keeping target interest rates at 2.25 – 2.5 per cent range. Members were however split on cutting future rates with the minutes noting: “several participants commented that if inflation did not show signs of moving up over coming quarters, there was a risk that inflation expectations could become anchored at levels below those consistent with the Committee’s symmetric 2 per cent objective”. Yield on 10Y USTs slid 5bps to at 2.379%.

UNITED KINGDOM

The end is drawing nigh for Theresa May Theresa May with Tory MPs expecting her to be forced out of office within days as the cabinet turned on the prime minister. In the latest blow May lost Andrea Leadsom, leader of the House of Commons and one of her loyal and determined supporters, resigned from the government on Wednesday evening. Citing the proposition of a second EU referendum raised this week as “dangerously divisive”, she made clear her disapproval of the revamped EU withdrawal agreement bill writing, “I considered carefully the timing of this decision, but I cannot fulfil my duty as leader of the House tomorrow, to announce a bill with new elements that I fundamentally oppose.” Leadsom’s resignation capped a rough day for May after growing anger from senior ministers and backbench Tory MPs over her attempt to lure Labour to back her Brexit deal with the prospect of a second referendum. The pound slid against the USD closing at 1.2661 as yield on 10Y UKTs lost 8bps to 1.08%.

EUROPEAN UNION

The European Parliament’s mainstream parties want to use the risk of populist upheaval to force Brussels to accept a “coalition agreement” written by MEPs setting out key policies for the next five years. The parliament’s attempt to set out the priorities of the new commission indicates a break from the past, where only Brussels had the right to come up with new policies and depended on steady majorities in the European Parliament and among EU governments to see them ratified. Polls point towards a loss of the joint majority for the conservative European People’s party and centre-left socialists – whose politicians have held top Brussels for long – leading to a very fragmented parliament after this week’s elections. The euro closed about flat at 1.1152 to the dollar while yield on 10Y DBRs lost 3bps to -0.10%.

ASIA

Asian markets were in the red in afternoon trading with losses of 1.67% for the Hang Seng and 1.36% for the CSI. The Nikkei was down 0.62% after survey suggested manufacturing contracted in May. The Markit/JMMA flash purchasing managers’ index fell below the key 50 mark – a sign of deceleration – to 49.6 in May from 50.2 in the previous month.

TURKEY

The US State Department has given Turkey until the end of the first week of June to cancel the S-400 missile defence system deal with Russia or risk sanctions and forfeiture of 100 promised F-35 jets among other penalties. The lira closed weaker to the dollar at 6.0964 and was above 6.13 level before open. TURKEY 47s also fell trading at 78.91.

LATAM

Barely a week before Cristina Fernández’ bombshell that she would run as vice-president on the ticket of Alberto Fernández, he openly voiced concerns about her thirst for power in an interview with a local radio station: “I would like Cristina to be a candidate [for president] or to go home… I don’t want there to be a puppet in the [presidential palace].” This is what the market fears would happen if Mr Fernández triumphs in the October elections to usher in a Peronist government effectively led by Ms Fernández. The market was calmed a bit on Monday after former economy minister Roberto Lavagna confirmed he would be running as well increasing the likelihood of a Peronist vote split and thus helping the incumbent, Macri. The peso was trading just about flat to the dollar at 44.869 while ARGENTINA 47s traded in the low 68s.

RUSSIA

The ruble edged up as the Finance Ministry sold an equivalent $1.44 billion on Wednesday up 0.2% against the dollar at 1415GMT before closing at 64.326. Demand for the OFZ bonds has surged amid expectations of a rate cut by the Russian central bank as the Finance Ministry’s statement that it could reduce its offerings of OFZ in the second half. RUSSIA 47s closed in the low 105s.