US stocks closed mixed on Wednesday as a boost in investor sentiment following the trade deal tailed off. President Trump was meanwhile impeached in the Democrat-led House over abuse of power and obstruction of Congress becoming only the third US President to do so. The market largely ignored the proceedings where voting was largely on partisan lines and expect Trump to get acquitted in the Republican-controlled Senate. The NASDAQ managed to eke out a 0.05% gain to continue notching records while the DOW was lower at -0.10%. The S&P retreated from an intraday record to close 0.04% down following a 10% slide in FedEx shares amid disappointing fiscal Q2 earnings and an outlook that fell short of expectations. Treasury yields were higher with 2Y and 10Y closing at 1.6287% and 1.9169% respectively.
Thursday’s Bank of England monetary policy announcement was largely expected to be a drab affair where the central bank would keep the policy unchanged, but interest may have piqued following revelations that some traders were getting some information before official announcements. The BoE confirmed an article in The Times which reported that a third-party supplier had been sending an audio feed of some press conferences before the main video feed became publicly available. The statement by the BoE said access to the audio feed had been disabled and underlined that security had been breached in respect of the broadcast of press conferences only. The pound closed weaker at $1.3078 while yield on 10Y and 30Y UKTs closed higher at 0.775% and 1.276% respectively.
Outgoing ECB executive board member Benoît Cœuré proposed that the bank should introduce a tolerance band of desired inflation at an event to mark the end of his term. The remarks come as the central bank is about to launch a review of its monetary policy strategy, including whether to amend its “below but close to 2%” inflation target. Cœuré’s remarks echoed earlier ones by Dutch central bank governor Klaas Knot who said the introduction of a symmetric band around the inflation target would allow the ECB time and flexibility to respond to forces it cannot control. The euro closed lower at $1.1114 while yield on 10Y and 30Y DBRs closed higher at -0.226% and 0.299% respectively.
Asian markets were lower on Thursday as the Bank of Japan voted to keep its monetary policy unchanged. The bank voted 7-2 in favour of the decision as it downgraded its view on industrial production and noted that overseas risks are significant, a change from the October statement where they were noted as increasing. The NIKKEI shed 0.29% while the HNANG SENG lost 0.30% as the CSI closed unchanged. The ASX also closed lower at -0.27% despite a stronger-than-expected jobs report for November where 39,900 jobs were added.
Turkey’s banking regulator, BDDK, announced on Wednesday that it will limit FX swaps and other derivatives with maturities of 7 days or lower as it seeks to reduce volatility in the lira. The decision to limit the amounts to 10% of banks’ equity follows up on another made last year that capped traded volumes to 25% of equity. The lira has been the worst performing EM currency so far this month having shed about 3.5% and closed weaker at 5.9269 to the dollar, reversing earlier gains of the day. TURKEY 29s were about flat, trading in the mid 110s.
Brazil expects an upgrade of the country’s sovereign risk rating in 2020 according to an Economy Ministry. The remarks were made during a press conference where Economy Minister Paulo Guedes said 2020 is expected to at least double 2019’s with the government planning to accelerate privatisation of state firms. Among a raft of other reforms, the ministry announced that the country also expects to introduce taxes on digital transactions particularly on mobile payments. The real closed weaker at 4.0721 to the dollar while BRAZIL 29s were lower, trading in the mid 106s.
Russia’s Federal Statistics Service, Rosstat, revised 2018 income data on Thursday that saw 2019 incomes getting pushed higher. The revision, prompted by the reviewing of additional information from the central bank and other government agencies, led to a revision of incomes for the year up to September rose 0.8% YoY compared to 0.2% advised previously. Rosstat’s revision curiously comes ahead of President Putin’s annual conference later in the day with Putin’s remarks that outlook was turning up at last year’s annual conference coming to the fore. The economy did not rebound as was expected with the growth of 1.8% he forecast then unlikely to exceed 1.3% and neither did the long-awaited rebound in living conditions materialise. The ruble closed weaker at 62.6623 to the dollar while RUSSIA 29s were lower, trading in the high 111s.
Ghana’s Q3 GDP decelerated to 5.6% YoY to continue the trend of slowing since the 7.4% growth recorded in Q3 2018. The government statistics office cited the 19% contraction in gold output on an annual basis as the key factor in the slowdown with growth in mining (which includes oil) slowed to 8.5%. The IMF’s latest projection sees the economy growing 7% in 2019 from 6.3% in 2018 but the latest Bloomberg survey forecasts a lower 6.5% growth. The cedi closed weaker at 5.7150 to the dollar while GHANA 29s were higher, trading in the high 101s.