The DOW closed 0.04% lower in what is a fairly down weak for the stock as it recorded its longest skid since a five-session slump in March. The S&P however, stopped its 4-day slide closing 0.38% up while the NASDAQ closed in 0.73% higher. The DOW remains on pace for its best return for June since 1938 while the S&P is still on track for its best June since 1955. Yield on 10Y USTs fell 3bps to 2.014%.
Vying Tory candidates Boris Johnson and Jeremy Hunt have one issue they are in agreement with: dismantling the long-standing Conservative stance on restricting immigration into Britain. Boris said that he wanted the UK to be “much more open” to high-skilled migrants something closer to the Australian points-based system while Hunt is daring to go a step further – doing away with David Cameron’s high-profile 2010 pledge to keep net immigration below 100,000. Interestingly, Cameron’s 2010 pledge has never been met with immigration having hit a high of 336,000 pre-referendum but has now fallen to 258,000 a year. Rules are already being changed with Home Secretary Sajid Javid having reinstated rules allowing international students to work for two years after the end of their course, a sign of Theresa May’s waning influence. The pound was slightly lower at $1.2674 while yield on 10Y UKTs closed lower at 0.8211%.
EU chief Brexit negotiator Michael Barnier is becoming an unlikely frontrunner for the Commission’s top job despite signs that his natural allies remain unconvinced. Despite not having thrown his name in the ring, he is emerging as a compromise candidate to become the European Commission President. His case is a curious one: Barnier, a Frenchman, is part of the pan-European group allied to Angela Merkel’s Christian Democrats which is laying claim to the job after having amassed the most votes in May’s elections. However, it is opposition groups that are pushing for his candidacy if their own choices are not installed which is not going down well with his party colleagues whoa are accusing him of undermining their formal candidate Bavarian Manfred Weber. As EU leaders convene in Brussels on Sunday for their third summit to discuss how to fill the bloc’s top positions, competing governments are making conflicting pitches resulting in a deadlocked process. The euro closed unchanged at $1.1369 while yield on 10Y DBRs closed 2bps lower at -0.3218%.
Asian stocks sank on their Friday openings and had not recovered by afternoon trading. The CSI slid the most, down 0.60% while the NIKKEI ant the HANG SENG were 0.29% and 0.36% lower. Investors are hopeful that Presidents Trump and Xi will agree to postpone new tariff hikes and other escalations as was the case after their December meeting. 11 rounds of meetings between both sides have so far yielded nothing and investors are becoming less speculative about the closure of a deal. A JP Morgan analyst said.
Turkey’s government is planning to use central bank cash to finance its widening budget deficit, just weeks after pulling back from a similar measure. The bill, set to make legislation as soon as the next few days, would let the central bank divert more of its profits to Treasury. The bill will also increase the income tax for individuals and a higher real estate levy for houses worth more that 10 million liras. The lira fell as low as 5.7923 on the news before recovering to close at 5.7719, slightly lower than the previous day’s close. TURKEY 47s closed higher at 84.173.
Brazil’s central bank slashed its 2019 growth forecast by more than half to 0.8% from a previous 2% in March citing factors such as falling confidence, a weak Q1 and global slowdown. The bank is expecting consumer prices to rise 3.6% this year and 3.7% in 2020 in the reference outlook which assumes a steady benchmark interest and currency. Meanwhile President Jair Bolsonaro is dealing with the embarrassment of having one of the soldiers on a Brazilian Air Force plane headed for the G20 summit arrested on possession of 39kg of cocaine. This is particularly embarrassing for the President whose campaign promised a clampdown on drug trafficking gangs. The real closed higher at 3.8197 to the dollar while BRAZIL 47s closed higher at 106.526.
President Vladimir Putin said that liberalism has run its course and has become obsolete in an interview with the Financial Times. In the interview published on Friday, he said that the ideology has increasingly come into conflict with what people really want criticising Angela Merkel for admitting more than 1 million Syrian refugees into Germany as a mistake. Interestingly, Russian troops played a major hand in this as they have shored up the Assad-led administration in war-torn Syria something Putin said “has been a good and positive return.” European Council President Donald Tusk told reporters he strongly disagreed with Putin’s sentiments and this rebuttal should set the tone for the summit where leaders are expected to clash over such issues as trade, foreign policy and climate. The ruble was about flat at 63.0648 to the dollar while RUSSIA 47s traded higher at 110.230.
Uber is aiming to consolidate operations in fast-growing West African spaces, the ride hailing app is in talks with regulators in both Ivory Coast and Senegal and are looking to further penetrate Nigeria and Ghana in a bid to expand their 36,000 active drivers. The company is also planning to offer boat hailing services in Lagos pending necessary approvals. In early hours of trading today, the South African Rand (ZAR) was exchanging for 14.1273 against the United States Dollar; while in the Eurobond space, R2044 was priced at a yield of 5.301%.