US stocks carried on the positive momentum on Tuesday to notch fresh records amid optimistic rhetoric on trade resolution as well as an upbeat assessment of the economy by the Fed. President Trump remarked that the Phase 1 deal was in the “final throes” during a White House event while Fed Chair Jerome Powell said the three rate cuts so far this year were starting to bear fruit particularly with an uptick in home purchases. The S&P gained 0.22% while the DOW and the NASDAQ rose 0.20% and 0.18% respectively. Treasury yields closed lower with 2Y and 10Y USTs at 1.5819% and 1.7414% respectively.
Labour’s tax plans came under the spotlight on Tuesday as leader Jeremy Corbyn faced a grueling BBC interview. The main point of contention was a long-held Labour insistence that tax rises would not affect those earning below £80,000. Corbyn was forced to admit that such earners could be hit by such plans as the scrapping of marriage tax allowance as well as charging capital gains at an individual’s income tax rate. Corbyn also struggled to explain how Labour would fund £58 billion to compensate women who lost out as a result of an increase in the pension age; the policy was announced on Sunday but the election manifesto released a few days earlier made no mention of it. That put to doubt Labour claims that it had fully costed plans for the tax rises and increased public spending. The pound closed weaker at $1.2866 while yield on 10Y and 30Y UKGs was lower at 0.650% and 1.214% respectively.
Asian stocks were mostly higher on Wednesday following in the footsteps of their Wall Street peers, buoyed by encouraging sentiment towards trade war resolution. The ASX led gains posting gains of 0.93% while the NIKKEI and the HANG SENG closed 0.28% and 0.15% higher. The CSI closed in the red however at -0.13% despite having been up 0.2% in early trading.
Turkey’s Finance Minister Berat Albaryak said inflation will be down to single digits in the coming year. The remarks came during a speech before a parliamentary commission on Tuesday with the minister emphasizing the role of monetary and fiscal policy coordination in achieving this. The remarks echoed President Erdogan’s, who had reportedly said the same earlier in the week according to some reports. Erdogan went on to include interest rates as well in his remarks and said both metrics would “permanently” stay in the single-digits range. The lira closed weaker at 5.7493 to the dollar while TURKEY 29s were lower, trading in the mid 109s.
Mexico unveiled an ambitious $43 billion infrastructure programme for 2020-24 on Wednesday. The programme, set to spur growth of over 4% came on the back of official data showing the country fell into recession in the first half of the year. Adjusted figures from the national statistics office showed that the economy had contracted 0.1% in each of the first two quarters of the year. More optimistic growth forecasts now point to 0.2% down from 2% growth in 2018. The projects under the programme include roads, rail, ports, airports as well as tourism. The peso closed weaker at 19.5191 to the dollar while MEX 29s were about flat, trading in the low 110s.
Russia’s Ministry of Finance will on Wednesday put on auction OFZ bonds maturing in February 2024. The sale will be a reopening of 6.5% coupon bonds with the last sale of the tranche having been in February 2024. Previous reopenings of the bond have been sold at yields above 8%. The ruble closed about flat at 63.9585 to the dollar while RUSSIA 29s were slightly higher, trading in the high 109s.
The Central Bank of Nigeria held its benchmark rate for a fourth consecutive meeting. The decision was supported by all of the 11 voting members of the Monetary Policy Committee and in line with the forecast in a Bloomberg survey. Addressing concerns over the spike in October inflation to a 17-month high, Governor Godwin Emefiele said the surge was “reactionary and temporary” as it was spurred by food prices following the closure of land borders earlier. The committee also supported the closure of borders saying the current costs were lower than medium-term benefits. Growth accelerated to 2.3%, the fastest in the year so far but the central bank reduced its forecast to 2.2% from 2.28% at the previous meeting. The naira closed firmer at 360.70 to the dollar while NGERIA 29s closed in the high 108s.