UNITED STATES

The DOW eked out an eighth-straight gain on Friday as US-China tensions eased and central banks released stimulus measures. The DOW closed just in the green at 0.14% as the S&P and NASDAQ closed 0.07% and 0.22% lower respectively. The DOW led the gains for the week up 1.6% while the S&P and NASDAQ followed suit rising 1.0% and 0.9% respectively. US consumers continue to be the mainstay of the US economy as retail sales grew faster than expected in August up 0.4% and 4.1% YoY according to the US Commerce Department. The selloff in treasuries continued with Friday recording an even bigger rise in yields: yield on 2Y USTs rose 8bps to 1.7999% while 10Y USTs saw a 12bps rise in yields to 1.8915%.

UNITED KINGDOM

Prime Minister Boris Johnson will today meet up with European Commission President Jean-Claude Juncker as his government sounded a more optimistic tone on the likelihood of reaching a Brexit deal; the premier wrote a column in today’s Daily Telegraph saying he believes a deal can still be struck with the EU. His delegation will include Brexit Secretary Steve Barclay as well as chief Brexit negotiator David Frost and Barclay suggested that there could be a transition period beyond 2020 to sort out issues relating to the backstop. Juncker however sounded less optimistic as he expressed doubt that that Boris will offer viable alternatives on the Irish impasse. The pound closed 1.3% higher at $1.2501 while yield on 10Y and 30Y UKTs rose with the 10Y yields going above the benchmark 0.75% rate for the first time since late July at 0.759% while 30Ys closed 9bps higher at 1.2215%.

EUROPEAN UNION

Mario Draghi’s measures to introduce a sizeable stimulus package at the ECB’s meeting last week had more opposition than was initially let on as policymakers made known the extent of the differences on Friday. While the measures had broad consensus, quantitative easing proved the main bone of contention as those opposed to it had stark opinions to the contrary. Arguing against it were Austrian central bank Governor Robert Holzmann, Dutchman Klaas Knot and Bundesbank Governor Jens Weidmann; Holzmann went as far as saying the package is possibly an error and could be changed once Lagarde takes over. Finn Olli Rehn and Latvian governor Ilmars Rimsevics remained in Draghi’s corner with Rimsevics saying he would favour even more purchases of government bonds if need be. The euro closed slightly firmer at $1.1073 while yield on 10Y and 30Y DBRs closed higher at -0.449% and 0.130% respectively.

ASIA

Asian stocks traded muted at best in early trading as global crude futures soared following attacks on Saudi oil infrastructure on Monday. The HANG SENG led the slide in afternoon trading at -1.04% while the CSI and ASX were about flat at 0.01% and 0.02% respectively. Meanwhile, Chinese Premier Li Keqiang said it would be “very difficult” for the economy to grow at an annual rate of 6% or higher in the prevailing economic climate having targeted growth in the 6%-6.5% range this year. In addition, a Reuters report showed that China’s industrial production grew 4.4% YoY in August against an expected 5.2%, its weakest reading in 17 years.

MIDDLE EAST

Brent surged almost 20% at the start of trading on Monday to $71.57 a barrel in the process posting its biggest ever intraday jump following a strike on a Saudi Arabian oil facility which shaved about 5% of global supplies. While prices pulled back about half of the initial surge the attacks highlight the risk of geopolitics to crude and threatens to destabilise an already-tense Middle East.  State energy producer lost about 5.7 million barrels per day of output following the attack by 10 unmanned aerial vehicles on the world’s biggest crude-processing facility. The US blames Iran for the attack with President Trump saying the US is “locked and loaded depending on verification” that Iran staged the attack.

TURKEY

Turkey is highly optimistic of single-digit inflation levels with Treasury and Finance Minister Berat Albayrak saying inflation, currently at 15% (CPI) for August, will “clearly” slow to single digits by the end of this month. The minister also said that GDP will be positive this year amid expected recovery in the second half of 2019. Elsewhere, the annual current account surplus widened to its highest level since January 2002 after recording a $1.16 billion surplus in July which pushed the 12-month rolling surplus to $4.45 billion. The data underlines the scale of economic adjustment that prompted aggressive monetary tightening curbing domestic demand following the currency crash last year; the deficit stood at $54.6 billion on the same period a year earlier. The lira closed weaker at 5.6873 to the dollar while TURKEY 29s and 47s slid to the high 103s and mid 82s respectively.

LATAM

Brazil’s economy declined in July according to a key gauge of activity bucking the trend of upswings that had accompanied the toe previous months. The country’s economic activity index dropped 0.16% cementing the need for another rate cut widely expected at this week’s central bank policy meeting. While recent data such as retail sales and services beat estimates to sustain unexpectedly positive Q2 figures, growth remains sluggish with the central bank and economy ministry forecasting sub-1% GDP growth this year. The real closed weaker at 4.0871 to the dollar awhile BRAZIL 29s and 47s closed lower, trading in the high 104s and high 112s respectively.

RUSSIA

The ruble is once again the best performer in emerging markets as it shrugged off sliding oil prices to post its best week since March posting gains of 1.8% against the dollar to close at 64.3461. Rates on benchmark 10Y OFZs also dropped to the lowest levels since 2013 closing at 6.980 on Friday. The bond rally follows hints by Bank of Russia Governor Elvira Nabiullina that the next rate cuts may be deeper than expected. Following the rate cut at the September 6 meeting, the central bank removed mention of a 6%-7% neutral rate in its outlook implying there could be room for the rate to go lower. The ECB stimulus measures also boosted emerging-market assets.

SSA

In South Africa, economic growth is unlikely to reach the treasury’s target of 1.5% in 2019 while the Central Bank sees the 0.6% as a realistic output. Slow economic reforms and massive bailouts to state-owned companies have affected the nation’s output and scope for stimulus, whilst the uncertainty has kept investment subdued to the country. The South African Rand (ZAR) was exchanging for 14.664 against the greenback, while the yield on SOAF was 3.934% at early trading today.