UNITED STATES

The markets have decided to remind us that March was not that long ago, plunging by the most in a day since the COVID selloff. S&P 500 traded down almost 6% and even NASDAQ managed to close -5%. USTs continued to rally with 10Y yield down 6bps to 0.66%, while oil continued declines, with Brent trading as low as $37/b. The sell-off came, as worries of second wave in the virus cases after reopened US states such as California and Texas saw the a faster pace of new infections, combined with grim FED outlook has led investor to take some profits from the recent rally. We are opening   cautiously in the green however this morning, with S&P 500 futures up 1%.

EUROPEAN UNION

In Europe, the sovereigns behaved themselves yesterday, staying up and trading higher, as the 10Y German Bund yields fell 6bps to –0.427%. Greek GGBs was an interesting phenomenon, as despite the sub-IG rating, the curve was unaffected by the risk-off sentiment and traded up 50c-1pt on average. The rest of periphery was also up, SPGB and BTP curves down 6bps in yield. ROMANI was heavy, with yields up 5bps on the day. New CROATI 31, issued a day before, was mixed, with bonds better offered at the open yesterday and trading as low as 97.9 (98.572 reoffer), however recovering back to reoffer later in the day, pushed by the RM demand.

MENA

In MENA, the space traded weaker, affected by the risk off sentiment and lower oil. In lower beta names, KSA was the underperformer with the long end trading down 1pt, while the rest of the IG names (QATAR, ADGB, etc) were little changed (5-6bps wider in spread terms on rates). In HY however the sell-off was more prominent with EGYPT ending the day 30-40bps wider in spread with selling more concentrated in the long end. OMAN was the outlier, ending the day stronger after the positive headlines on the potential financial support discussion with the Gulf states. OMAN bonds managed to trade up as much as 2-3pts on the announcement, however falling back to marginally unchanged on the day shortly after.

LATAM

In Latam, the selling was also prominent, encompassing both HY and IG names. COLOM and MEX underperformed, with the curves down 1-4pts on lower oil. A similar move seen in PEMEX as well. ARGENT traded down 50c-1.25pts ahead of the official deadline for the first proposal today. ECUA however opened on a stable tone, but quickly turned -2.5pts negative as the headlines hit that FinMin Richard Martinez might resign. The curve ended the day slightly better though up from the lows to -1.5pts on the day.

RUSSIA

Lower oil has also led to a small correction in Russian space, with the sovereign curve down as much as 2 points in the long end, ahead of the long weekend for the locals as Russia is celebrating National day today. KAZAKS curve has also seen sellers coming out to the market leading to a 20-50c correction in the curve. HY names were affected stronger with UKRAIN trading down 3-4pts, despite the positive headlines this week that the $5bn IMF loan was finally approved for the country and the first tranche of $2.1bn will be disbursed soon.

SSA

On the SSA front there was also a repricing yesterday although few trades went thorough as holders were trying to comprehend the risk off mood and its validity. In retrospect, it seems that Goldman’s call on a short-term correction on Brent to 35$ came at perfect timing; It came post the much-anticipated OPEC+ agreement where most was already priced in, after the solid risk on mood that took risky assets a few legs higher last week and pre the uncertainty of the FOMC meeting. We saw some flow in the Nigerian banks that are less volatile to day to day market views where FIDBAN 22 traded 104 handle while UBA 22s at 100. Continue to see buyers of SEPLN 23 but holders still refuse to let it go albeit the run up to 101 levels on the offer. The ANGOLA curve traded lower on the risk off mood with 25s, 28s and 29s all down 3,4 points from last month’s highs to 76 and 69 handle respectively. NIGERIA 49s trade back to 86 handle, 31s to 97 handle and 38s at 88. If investors have a conviction on where the markets are heading in the medium term they should grasp the opportunities to pick up positions on the down days while to lock in profits when valuations start looking too frothy.

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And just because the team here asked multiple times: in Penguin news, the love story of the two African Penguins from Penguin Point habitat in the National Aviary grabbed the hearts of many, as Stanley the penguin showed an amazing support for his fallen-ill mate Dottie, being reported visiting her in ICU every day and encouraging her to eat along with a team of veterinarians. And how cute is that! 😊

Happy Friday everyone!