US stocks closed lower on Monday as poor manufacturing data added to the trade war jitters to sour investor sentiment. US manufacturing contracted for a fourth month as ISM manufacturing PMI for November came at 48.1. The figure was below October’s 48.3 and a MarketWatch survey estimate of 49.2. New orders dipped even further to 47.2 compared to October’s 49.1. On the trade front, Commerce Secretary Wilbur Ross said the US is ready to levy more tariffs in the absence of a trade deal as the December 15 deadline for an additional 15% tariffs on consumer goods draws closer. The NASDAQ lost 1.12% while the DOW and the S&P shed 0.86% respectively. 10Y UST yields were higher at 1.8206%.


UK manufacturing slipped further into contraction territory with jobs being cut at the fastest pace since 2012. The IHS Markit/CIPS Manufacturing PMI slid to 48.9 for November versus 49.6 in October with the employment sub-index dropping to 46.81, the lowest since September 2012. The worsening of manufacturing activity contrasted with signs of bottoming out in other major markets such as China, Eurozone and Japan where improvements in PMI were seen. The pound was higher at $1.2939 while yield on 10Y and 30Y UKTs was higher at 0.739% and 1.246% respectively.


The US imposed 100% tariffs on $2.4 billion of French goods on Monday over what it considers were unfair digital services taxes imposed on American technology companies.  France levied taxes on tech companies after concerns that they were unfairly avoiding taxes on many digital transactions. Announcing the tariffs, the US Trade Representative’s office also said it was looking at widening a range of tariffs on EU products over Airbus subsidies which the WTO has ruled illegal. The euro closed higher at $1.1079 while yield on 10Y and 30Y DBRs was higher at -0.281% and 0.240% respectively.


Asian markets were mostly lower on Tuesday on concerns over the US’ imposition of tariffs on new fronts ahead of the December 15 set of tariffs on Chinese goods. The CSI was however unfazed, recovering from a 0.3% slip in the morning to close 0.31% higher while the HANG SENG and the NIKKEI shed 0.20% and 0.64% respectively. The ASX led the slide, closing 2.19% under as the Reserve Bank of Australia held rates amid increasing unemployment and rising property prices.


Turkish inflation accelerated to 10.6% in November from 8.6% in October to end a year-long run of slowdown. Turkstat said the increase was mainly driven by a surge in food and beverages, although an increase in costs for education and health also contributed. Ahead of the CBRT’s next monetary policy meeting next week, Governor Murat Uysal will be stuck between further aggressive cuts – with 10 points having been shaved in 3 meetings – or comparatively more muted cuts; Uysal will however be wary of President Erdogan’s calls for lower rates as Erdogan has continuously expressed his desire for rates to fall into single digits in 2020. The lira fell to 5.7559 to the dollar on the news having closed at 5.7410 on Monday before paring the losses. TURKEY 29s were lower, trading in the low 108s as did TURKEY 40Ss trading in the mid 85s.


President Trump announced the re-imposition of tariffs on Brazil and Argentina steel and aluminium imports alleging the countries have been devaluing their currencies to the detriment of US farmers. The tariffs – 25% on steel and 10% on aluminium – were originally levied in 2018 but had been waived for the two countries following a backlash from diplomats and domestic consumers. For the year to October Brazil had exported $2.2 billion of steel and iron to the US, some 9% of its total exports to the US and its soyabeans exports to China have also grown with the trade war. The real was firmer at 4.2169 to the dollar while BRAZIL 29s and 50s were lower, trading in the high 104s and high 95s respectively.


The Central Bank of Nigeria’s reserves fell to their lowest level in some two years as the bank splurged $5.3 billion since July to meet import demands. Governor Godwin Emefiele said the bank would stick to its policy of maintaining the stable exchange rate nonetheless saying the drop was not enough to warrant any panic. Reports citing senior central bank officials said the bank was not considering a devaluation even as analysts suggest the naira is overvalued at current levels. Emefiele told investors he would only consider this once reserves dropped below $30 million. The naira closed weaker at 362.48 to the dollar while NGERIA 49s were lower, trading in the high 107s.