UNITED STATES

US stocks closed higher on Monday in the aftermath of the agreement between Washington and Beijing to stop escalating their trade dispute. The NASDAQ recorded the highest gains with 1.06% on the back of the easing of the Huawei blacklist; US companies are now allowed to trade with the Chinese telecommunications giant as long as the transactions do not present a “great, national emergency problem.” The DOW closed 0.44% higher while the S&P closed 0.77% up having recorded a new intraday high of 2,977.09 points. Yield on 10Y USTs closed about 2bps higher at 2.024%.

UNITED KINGDOM

Prime Minister Theresa May called on her successor to take a strongly pro-business position after Brexit as both of the candidates have promised to listen to business concerns if they win the Tory leadership. Her comments seemed to be more directed towards Boris Johnson who reportedly told off UK businesses after he was queried about implications of a hard Brexit last year. Boris has tried to mend bridges with business in his campaign however, offering tax cuts and a pro-business agenda should he get chosen to be leader this month. The pound closed lower at $1.2641 while yield on 10Y UKTs shed 2bps to 0.8121%.

EUROPEAN UNION

Hours of talks between EU leaders to decide on top positions of the bloc’s institutions ended on an impasse yesterday as no agreement could be made on who should lead. France President Emmanuel macron was particularly irate as he bemoaned how the debacle would dent the EU’s credibility. Macron was backing Frans Timmermans, having discussed it with Angela Merkel at the G20 summit, but the plan found little backing on Monday. Leaders resume the talks today in what is hopefully going to be a decisive day as the talks have yielded nothing tangible at present. The euro was lower against the dollar at 1.1286 while yield on 10Y DBRs fell about 3bps to -0.3581%.

ASIA

Asian stocks were mixed in afternoon trading as the market assessed the tariff truce and the potential for a trade deal with no dates having been given for the net round of talks. The HANG SENG surged the highest at 1.28%, making up lost ground as Hong Kong was closed yesterday to mark the anniversary of the handover to China from Britain. This was despite another major clash between the police and protesters yesterday which resulted in protesters breaking into the legislature’s main building. The NIKKEI was trading 0.11% up while the CSI was 0.07% lower.

OIL

Brent pared early morning gains to close at $65.06 a barrel on a day that OPEC officially agreed to extend production cuts to 2020. Announcing the position, Venezuela’s oil minister Manuel Fernandez said that the production cuts would be extended until March 2020. While demand for crude is largely expected to soften thereby prompting an extension of the cut, Russia had seemed not too keen on further cuts; president Putin however put that to rest during the G20 summit when he announced that an extension had been agreed.

TURKEY

Turkish assets rallied on Monday following comments by President Trump over purchases of the S-400s. The lira rallied to over 1% to 5.6506 to the dollar, its strongest level since early April. The Borsa Istanbul 100 also had a good day surging more than 3% while TURKEY 47s closed higher at 86.045 as did other dollar-denominated sovereign debt, sending yields lower. The generally optimistic outcome from the G20 summit saw Turkey assets outperforming the rest of the emerging markets.

LATAM

Brazil’s unemployment rate fell to 12.3% in the three months to May on the back of an increase in informal labour. The rate fell to 12.3% from 12.5%, a second executive decline and in line with estimates from a Bloomberg survey. Unemployment remains in the double digits however with 13 million people unemployed and this has consequently weakened consumer spending and in turn hindered economic growth. Including the underemployed or people working an insufficient number of hours, the number shot to 28.5 million, a record in the series. The real closed sklightly higher to the dollar at 3.8410 while BRAZIL 47s closed higher at 107.356.

RUSSIA

Russia resumed crude flows in full via the Druzhba pipeline on Monday, more than two months after contaminated crude was first detected. Estimates pointed to as much as 8% of Europe’s supply had been affected by the closure with Russian oil production falling to 10.87 million barrels per day, the lowest since 2016. While Russian officials had said this should not affect production, analysts expect oil exports to be lower in Q2. The ruble closed higher at 62.9727 to the dollar as did RUSSIA 47s at 111.743.

SSA

Morocco is hoping to attract investment totaling US$10bn by creating a new tech city in Tangiers, this move is set to create 100,000 new jobs. Reports from Morocco suggest that the interest by investors in this project has already exceeded expectations. The government will grant tax incentives to companies operating in the automotive, aeronautical, textile, chemical, renewable energy and food industries. The South African Rand (ZAR) was trading for 14.1430 against the greenback, while the yield on ZAMBIA 5-YR Eurobond was priced at a yield of 19.638 at close of markets yesterday.