US stocks closed just higher on Thursday as optimism on the trade war outweighed the slide earlier in the day. The trade deficit also fell 7.6% in October to a 16-month low although remains on track to record the biggest gap in 11 years. The S&P closed 0.15% higher while the DOW and the NASDAQ finished 0.10% and 0.05% higher respectively. Treasury yields closed higher with 2Y and 10Y USTs at 1.5923% and 1.8069% respectively.
Boris Johnson set out the Tory agenda for the first 100 days should he win the elections with plans to put his Brexit agreement before Parliament by Christmas having set out the legislative agenda in the Queen’s Speech on December 19. The Conservative election mantra is “Get Brexit Done” and Boris is bent on getting the exit done with the soonest possible. The Tories have at least a 10-point lead over Labour in most polls. The pound closed higher at $1.3157 while yield on 10Y and 30Y UKGs closed higher at 0.773% and 1.292% respectively.
The latest figures by the Federal statistics Office show Germany’s manufacturing sector is showing little signs of recovery from its two-year slump. Provisional figures released on Thursday showed manufacturing orders for October falling 0.4% having been expected to increase by 0.3% in a Reuters poll. November is expected to fare the same with an Ifo survey of industrial companies showing order books shrank further in November. There had been hopes of a recovery after October and November manufacturing PMIs recorded improvements. The euro closed higher at $1.1104 while yield on 10Y and 30Y DBRs was higher at -0.294% and 0.217% respectively.
Asian markets were higher on Friday spurred by some optimism on the Chinese end regarding trade negotiations. China’s Commerce Minister Gao Feng said negotiators remain in close communication despite recent tensions although he emphasised that China insists on tariff rollbacks on any agreement. The HANG SENG led gains at 1.07% while the ASX and the NIKKEI gained 0.36% and 0.23% respectively. The CSI gained from about flat in early trading to close 0.43% higher.
Aramco’s fraught transition to public markets came to an end after the company raised a record $25.6 billion in its IPO. While the offering tops Alibaba’s 2014 IPO, it fell short of the $2 trillion valuation Prince Mohammed bin Salman was angling for with the $8.53 share price representing a valuation of $1.7 trillion. The listing drew much demand as well, getting bids about 4.7 times what was on offer. The IPO comes as OPEC+ looks set to agreeing to shave another 500,000 barrels off daily production which should support the shares in the early days of trading.
Argentina’s central bank president Guido Sandleris announced that he will resign from the post on December 10 ahead of the naming of a new economic team by incoming president Alberto Fernandez. Sandleris had only taken the helm in September 2018 as the government renegotiated its $56 billion IMF bailout package. The central bank is not legally independent from the executive in Argentina and Sandleris blamed this for the failure to tame inflation. Fernandez is set to announce his full cabinet later in the day on Friday. The peso closed weaker at 59.9800 to the dollar while ARGENT 28s were lower, trading in the mid 38s.
Russia may pass over hard currency debt issues in 2020 following the tightening of sanctions by the US. The head of the debt department in the Finance Ministry Konstantin Vyshkovsky said the ministry will meet with Euroclear later this month to find out if would be possible to borrow in international markets; the first Eurobond sale after the initial sanctions in 2015 faced challenges as international clearing houses initially said they couldn’t process trading. Up to $3 billion is scheduled to be borrowed abroad in the 2020 draft budget and this could be raised locally should it prove challenging with foreign investors. Russia could risk losing its place on major indices however should it ditch international markets. The ruble closed firmer at 63.7332 to the dollar while RUSSIA 29s were about flat trading in the high 110s.
Kenyan President Uhuru Kenyatta approved a supplementary budget releasing an equivalent $723 million to fund government services and projects up to June 2020. This follows the approval of almost 3% of additional government spending by Parliament for the 2019-20 fiscal year despite revenue collection underperforming. In addition, the government is set to issue an equivalent $3.54 billion in bonds to repair and develop road infrastructure. The bonds, to be issued in tranches, are likely to draw warnings from IMF which raised its assessment of the risk of external debt distress to moderate from low last year. The shilling closed firmer at 101.63 to the dollar while KENINT 28s were slightly lower, trading in the mid 103s.