UNITED STATES

US stocks rebounded on Wednesday as President Trump’s comments that a US-China trade deal could be imminent outweighed concerns about a congressional impeachment inquiry against Trump. The NASDAQ led gains, rising 1.05% while the S&P and the DOW were up 0.62% and 0.61% respectively. Yield on 2Y and 10Y USTs closed higher at 1.6795% (+5bps) and 1.7372% (+9bps).

UNITED KINGDOM

Prime Minister Boris Johnson did not back down to MPs during Wednesday’s session in the House of Commons despite his move to prorogue Parliament having been overturned by the Supreme Court. Boris accused opposition MPs of sabotaging Brexit negotiations with the 3-hour debate turning ugly at times as Tories and Labour MPs traded accusations. While Boris is angling for a general election and dared the opposition to table of motion of no-confidence in him, Labour leader Jeremy Corbyn said his party would back neither until at least Boris had negotiated for an extension to the Brexit deadline. The pound closed over 1% weaker against the dollar at 1.2353 while yield on 10Y and 30Y UKTs closed slightly higher at 0.531% and 0.960% respectively.

EUROPEAN UNION

Germany’s representative on the ECB’s executive board Sabine Lautenschläger quit on Wednesday in a move perhaps highlighting the deep divisions at the central bank over its recent decision to loosen monetary policy. The announcement of the new stimulus measures saw unusually vocal opposition from governing council members from predominantly core countries. Lautenschläger, a hawk herself, was one of the few members who reportedly spoke against the restarting of bond purchases at the ECB meeting. The euro closed lower at $1.0943 while yield on 10Y and 30Y DBRs closed higher at -0.575% and -0.092% respectively.

ASIA

Asia stocks struggled to stay positive despite a spate of positive developments on the trade front. The NIKKEI had retreated from morning highs to trade 0.13% higher the afternoon. The Japanese bourse had gone as high as 0.3% in early trading following the signing of a limited trade deal between Japan and the US; the deal did not cover vehicles however, a sticking point in the negotiations. The HANG SENG was trading 0.18% higher in the afternoon while the CSI had recovered somewhat from early losses to trade 0.59% lower. Investors in Chinese stocks had mostly been taking profits ahead of suspension of trading next week as for the country’s National Day, offsetting President Trump’s comments that a Chinese deal could happen sooner than expected.

TURKEY

CBRT Governor Murat Uysal said the central bank might look to moderate the pace of easing after cutting 750bps off the benchmark rate in just two meetings. Addressing reporters in Ankara on Wednesday, Uysal said a cautious stance in monetary policy will continue with inflation expected to continue its downward trajectory; August inflation stood at 15%, a far cry from the 25.2% from October last year. The lira, which had weakened against the dollar on the day, firmed on Uysal’s comments to close 0.5% stronger at 5.6697 while TURKEY 29s were slightly higher, trading in the mid 105s.

LATAM

Argentina’s $5.4 billion disbursement from the IMF for September is definitely on hold for now following remarks by the Fund’s acting boss David Lipton. Speaking to Bloomberg on Wednesday, Lipton said the IMF’s job at the moment is, among other things, to “work towards the resumption of a (financial) relationship which may have to wait a while;” previously the IMF had been apparently waiting for more clarity on the next government’s policies. The peso closed weaker at 57.0636 against the dollar while ARGENT 28s and 47s were lower, trading in the low 40s and mid 38s respectively.

RUSSIA

The Ministry of Finance’s unlimited offerings for its last auction of Q3 saw considerable demand with the 2025 tranche seeing about 4.9 times demand for the 17.4 billion rubles sold while the 2022 tranche saw demand topping 11 times the 15.1 billion rubles offering. Non-resident holdings of OFZs fell slightly in August to 29.7% from 30.0% in July. The ruble closed slightly weaker at 64.1548 to the dollar while RUSSIA 29s and 47s were lower, trading in the mid 107s and mid 119s respectively.

SSA

Wednesday’s Quarterly Bulletin from South Africa’s Reserve Bank showed that the economy entered the 70th month of a weakening cycle in September, marking its longest downward cycle since 1945. Economic growth and business confidence remain low as the manufacturing sector shows contraction in Africa’s most industrialised economy. To add to the woes, the economy has been expanding below 2% since 2013 (with a 0.6% growth forecast this year) and coupled with a high unemployment rate, investors are not too keen on coming in. The rand closed at 14.9889 to the dollar while SOAF 28s fell by almost a point to the lower 96s.