US stocks shed over 1% as they continued their trend in the red. The DOW shed 1.11%, the NASDAQ was 1.58% down while the S&P closed 1.19% lower. Amid the global uncertainty, investors have turned to treasuries and 10Y USTs lost 10bps to close at 2.296%, the lowest since October 2017. Curiously, the yield also fell below that of 3-month Treasury bills by 6.6bps – a yield curve inversion – often a precursor to recessions in the past.


Asian stocks were mixed in afternoon trading as investors largely remained concerned about the prospect of a protracted trade war. The CSI and HANG SENG opened in the green and were trading 0.09% and 0.33% up respectively while the NIKKEI pulled back from its -0.6% opening to close 0.16% lower. President Trump stated yesterday that Huawei could be included as part of a trade deal reinforcing the notion that it is a pawn in the US-China trade war despite the insistence by US officials that its crackdown is a national security issue.


Theresa May is set to announce plans to step down as prime minister, finally calling time on her fruitless three-year attempt to deliver Brexit. Tory MPs expect Mrs May to formally leave office the week of June 10 to avoid the disgrace of being a caretaker prime minister when she receives Donald Trump on a state visit on June 3 to 5. Plans are already in motion to make her leave by June 10 if she does not agree to do so with the executive of the 1922 committee ready to open sealed envelopes from a secret ballot on Wednesday on whether to change Conservative party rules to allow for another no-confidence vote for the premier. The pound closed about flat against the dollar at 1.2657 while yield on 10Y UKTs fell below 1% closing at 0.9522%.


Minutes of the European Central Bank’s monetary policy discussions from last month show that while policymakers believed it was not necessary to act as soon as the bank’s April 10 vote, some policymakers are losing confidence in the likelihood of a rebound. The ECB is preparing for a meeting in Lithuania next month that will include revisions to its forecasts and deliberations over the next set of TLTROs. The bank loans are one of the tools the ECB has used in the last decade to bolster the economy in addition to the negative deposit rate which banks have said hurts profitability. The euro closed marginally higher against the dollar at 1.1181 while yield on 10Y DBRs closed 2bps down to -0.1211%.


Brent closed at 67.76 in oil’s worst daily performance of the year as investors flee risky assets in the face of mounting trade tensions. Despite tensions in the Middle East and cuts in supply due to sanctions on Iran and Venezuela as well as turmoil in Libya, the market has been more drawn to swelling American crude stockpiles which have exacerbated fears of a glut. WTI also settled below its 200-day moving average, a signal to sell for some investors.


A report of the decision to order a rerun of Istanbul’s elections showed that the electoral body was split with four of the eleven-member judging panel voting against the decision. The electoral body’s head Said Guven interestingly voted against the decision arguing that poll irregularities were linked to several parties including Erdogan’s AKP and were not as extensive enough to warrant a rerun. The opposition CHP is citing undue presidential influence on the board’s decision with its deputy chair saying, “A trap has been set up for democracy.” The lira was about flat to the dollar at 6.0954 while Turkey 47s slid to close at 77.270.


Brazil’s Economy Minister Paulo Guedes said the pension bill should be approved in 60 to 90 days providing fiscal relief banking on support from the heads of the lower house and senate whom he said have been “extraordinarily supportive.” He said once done, this will result in upward growth revisions for economic growth in the 2 or 3 months that will follow and a growth rate of 3% for the next 10 years. He also castigated lobbyists whom he said were the only ones against pension reform while the population understood the need for one. The real traded unchanged to the dollar at 4.0408 as were BRAZIL 47s which closed marginally up at 99.274.


An IMF report says Russia investment may add 0.1% to 0.5% of growth noting that inflationary pressures have decreased. Speaking in Moscow on Thursday morning, IMF Russia mission chief James Roaf said the increase in potential growth hinges on how investments in National Projects program will be selected and implemented while calling on the government to abstain from fiscal transactions using the National Wellbeing Fund. The ruble slid against the dollar to 64.8612 as RUSSIA 47s slid to close at 104.423.