UNITED STATES

US stocks closed higher on Wednesday on a day that saw the DOW and S&P move closer to their all-time highs. The DOW moved within 0.8% of its all-time high after gaining 0.85% on the day and in the process moved above 27,000 for the first time since July; the S&P likewise finished just 0.8% from its record close and above 3,000 for the first time in six weeks. The NASDAQ bucked a 3-day losing streak closing 1.06% higher on the day. Meanwhile, President Trump picked up his rhetoric on pushing the Fed for lower rates saying rates should be cut to “zero or less”. The selloff in treasuries continued with yield on 10Y USTs closing at 1.7385%, up 12.2% week-to-date; yield on 2Y USTs also closed higher at 1.6742%.

UNITED KINGDOM

The run of defeats for Prime Minister Boris Johnson continue to stack up following a ruling by a Scottish court that suspension of Parliament was unlawful. The unanimous decision by a panel of Edinburgh judges means the case will now proceed to the UK Supreme Court as a London court had earlier ruled that the motivation for proroguing Parliament was not material. The government later released the Operation Yellowhammer document, detailing the worst-case scenario of a no-deal Brexit. The document undermines Boris’ assertions that the UK will be able to cope with such scenarios as public disorder likely to result. The pound closed lower at $1.2326 while yield on 10Y and 30Y UKTs closed about flat at 0.6357% and 1.1172% respectively.

EUROPEAN UNION

ECB President Mario Draghi will be in for a heated policy meeting today as the bank discusses how to ramp up stimulus in the face of fading growth and inflation. Draghi will likely have to make more use of his ability to overcome internal opposition, something he’s done so often during his tenure, to ward off skepticism from other Governing Council members on the extent of stimulus. While there is almost certain accession to a rate cut (10bps), Council members have been at odds over whether or not to start quantitative easing. Members from France, Germany and the Netherlands have emphasized that there is no compelling need to start QE while others such as Finn Olli Rehn argues that any stimulus package must exceed expectations to be effective. The euro closed lower at $1.1010 while yield on 10Y and 30Y DBRs closed lower at -0.564% and 0.022% respectively.

ASIA

Asian markets were mostly higher on Thursday following an easing of trade tensions between the US and China. Earlier on Wednesday, China said it would exempt some US goods from tariff hikes that had been slated for September 17 and in turn President Trump announced that tariff hikes scheduled to take effect on October 1 would be put off until October 15 as a gesture of goodwill. The CSI and the NIKKEI led the gains, trading 0.75%v higher in the afternoon as the ASX rose 0.25%. The HANG SENG meanwhile was down 0.08% having recovered from a 0.5% slip in early trading.

TURKEY

Economists surveyed by Bloomberg are predicting another sizable cut to Turkey’s benchmark rate following the CBRT’s monetary policy meeting later today; the median estimate points to a 275bps cut which will result in a benchmark rate of 17.00%. Despite Presidnt Erdogan’s remarks calling for single-digit borrowing costs on Sunday, the markets are more at ease this time than before the July meeting with the 90-day realised volatility on the Borsa Istanbul 100 close to a 5-month low while the 30-day volatility is at a 3-month low. The lira in turn ended four days of losses to close 0.3% higher against the dollar at 5.7495 while TURKEY 29s and 47s were lower, trading in the high 102s and high 81s respectively.

LATAM

PEMEX bonds rallied yesterday following the announcement of a $5 billion capital injection by the Mexican government to improve the ailing oil company’s debt profile; yield fell as much as 21bps on PEMEX 6 ½ 03/13/27 Corp. The capital should be a welcome shot in the arm for the world’s most indebted major oil producer facing more than $100 billion in liabilities and should help boost production as it fights a possible ratings downgrade to junk. Government support for the oil company has totaled close to $10 billion so far this year including a previous cash infusion of $1.3 billion, $1.5 billion in tax relief and $1.8 billion in payouts on pension notes. The peso closed slightly weaker at 19.5094 to the dollar while MEX 29s were higher, trading in the upper 108s.

RUSSIA

Wednesday’s OFZ auction saw significant demand with the 2025 issue oversubscribed 2.6 times. The issue size was reduced to 14.55 billion rubles from the 20 billion rubles originally announced. Elsewhere, Russia’s budget surplus for the year to August stood at 2.56 trillion rubles according to a Finance Ministry release. Revenue for the period was 66% of the full-year plan while spending was at 559% of the full-year plan. The ruble closed weaker at 65.4996 while RUSSIA 29s were higher, trading in the low 107s.