US stocks rebounded on Monday after President Trump remarked that he was ready to return to the negotiating table as the G7 summit concluded. Trump said the US had received two “very good calls” from China, although the Chinese downplayed the significance of the calls. The NASDAQ closed the highest on the day with 1.32% while the S&P and the DOW closed 1.10% and 1.05% higher respectively. Yields on 2Y and 10Y USTs closed higher at 1.535% and 1.538% respectively.
Prime Minister Boris Johnson said he was “marginally more optimistic” about striking a new Brexit deal as he addressed reporters at the end of the G7 summit. Boris said other EU leaders wanted the Brexit process concluded soon but warned that the talks with EU might run up to the October 31 deadline by which time the UK will leave the EU, with or without a deal. Addressing calls by the Labour Party for a second Brexit referendum, the premier said that Parliament should respect the referendum result stressing that “it’s what our friends on the other side of the Channel also want.” The pound closed weaker against the dollar at 1.2217.
German business confidence continued its decline, dropping to its weakest level in seven years as the economy struggles with a deepening manufacturing slump. Ifo’s business climate index fell to 94.3 in August against a median Bloomberg survey estimate of 95.1, marking a fifth consecutive decline. Commenting on the figure Ifo Institute president Clemens Fuest noted that weakness was now spreading from manufacturing to other sectors with service providers, particularly logistics, also feeling the pinch. Several German blue chips including Henkel A and Siemens have forecast weaker earnings as the economy verges on the brink of recession. The euro closed lower at $1.1102 while yield on 10Y and 30Y DBRs rose to -0.666% and -0.128% respectively.
Asian markets were mostly higher in early trading on Tuesday following positive remarks by President Trump regarding the trade war with China. President Trump said he was ready to resume negotiations with China and signaled opened to delaying or cancelling a fresh round of tariff hikes. Most indices were higher in afternoon trading save the HANG SENG which was trading 0.27% lower: the CSI led the gains with 1.35% while the NIKKEI and ASX followed suit with 0.96% and 0.48% respectively.
IMF officials jetted into Argentina on Saturday to engage policymakers as well as frontrunner in the presidential elections Alberto Fernandez over the $56 bailout package. The situation appears to be a repeat of the time Argentina crashed out of an IMF programme, defaulted on debt and fell into depression and the officials would want to assess whether they should keep sending the cash with a $5.3 billion instalment due next month. Fernandez had been touting his experience working with the IMF during that depression. During a meeting with Fernandez on Monday, the opposition candidate was in agreement with the IMF’s main objectives but emphasised that the IMF and the government had generated the crisis and therefore had the responsibility of reversing it. The peso closed weaker at 55.1450 to the dollar while ARGENT 28s and 48s were lower, trading in the high 48s and mid 47s rrespectively.
The Bank of Russia expects economic growth to accelerate in Q3 to as high as 1.3% YoY in a report. The increased production will be as a result of an increase in public investment as implementation of national projects begins in earnest. The forecast range however indicates a possibility of the economy slowing from the 0.9% growth recorded in Q2 to 0.8%. The report noted that budget spending fell 6.5% YoY in Q2 in nominal terms in turn affecting overall investment in the economy. President Putin also commented on H1 economic performance saying the overall trend was not satisfactory and that economic growth needs to be more sustainable and “dynamic”; he also noted the movement of inflation towards the 4% level as a positive factor. The ruble was weaker at 66.0604 to the dollar while RUSSIA 29s and 47s were about flat, trading in the high 106s and high 117s respectively.
In Ghana the Securities and Exchange Commission has instructed money managers to increase their minimum capital reserve to US$369,000 from US$18,450 by December 2020 in a bid to restore confidence to the industry after a recent regulatory clean-up trapped the funds of more than 70,000 investors, due to some fund managers were unable to meet up with requirements. According to Daniel Ogbarmey, Director General of the SEC, the root-cause of the problem was the low capital requirement which allowed too many fund managers and strained supervisory capacity. The Ghanaian Cedi (GHS) was trading at 5.4196 against the greenback, while the yield on GHANA 29s was 7.903% at close of markets yesterday.