US stocks rebounded on Monday even as the prospects of a resurgence of COVID-19 lingered with several states re-imposing restrictions on business opening. The DOW led gains, up 2.32% while the S&P and the NASDAQ gained 1.46% and 1.19% respectively. Yield on 10Y USTs closed lower at 0.6234%.
UK Q1 GDP shrank 2.2% compared to the previous quarter, the joint-sharpest contraction in some 40 years. The revision by the Office for National Statistics was primarily driven by a greater fall in household expenditure to 2.9% from a previous 1.7% – contraction had initially been estimated at 2.0%. The pound closed weaker at $1.2298 while Yield on 10Y UKTs closed lower at 0.163%.
Asian shares were higher on Tuesday building on Wall Street optimism and better than expected economic data from China. The official manufacturing PMI rose to 50.9 in June against an expected 50.5 according to a WSJ poll while the non-manufacturing PMI rose to 54.4, a seven-month high; the CSI closed 0.78% higher. The ASX led gains, up 1.42% while the NIKKEI and the HANG SENG rose 1.33% and 0.52% respectively.
Turkey’s trade deficit widened 103% YoY in May according to the latest data release by TurkStat. Exports fell 41% as imports also fell 28% on an annual basis. The lira closed slightly firmer at 6.8548 to the dollar while TURKEY 30s were lower, trading in the low 135s.
Brazil job losses for May were sharply lower than expectations as the economy started reopening even as coronavirus infections showed no signs of easing. 332k jobs were lost during the month, a far cry from the 900k expected in a Bloomberg poll and the 860k lost in April. Economists however lowered their year-end forecast for the Selic – 2% – and growth to -6.54% as COVID-19 cases are now only second to the US and more than double, third-placed Russia’s. The real closed firmer at 5.4045 to the dollar while BRAZIL 30s were about flat, trading in the low 96s.
Analysts are still seeing scope for more cuts by the Bank of Russia even as the latest cut left the benchmark rate at 4.5%. the median forecast in a Bloomberg poll suggest an additional 50bps will be cut over the next 3 months and the rate will remain at the level until 2H 2021. Governor Elvira Nabiullina hinted that another reduction could be on the cards at a press briefing following the latest MPC meeting. The ruble closed weaker at 70.0143 to the dollar while RUSSIA 29s traded lower in the mid 114s.
Kenya’s economy is set to contract for the first time since 1993 according to the latest IMF projection. The 0.3% contraction is a revision from the April projection of 1% growth in 2020; the economy is expected to then rebound 4% in 2020. Ahead of a government report on Tuesday, a Bloomberg poll expects Q1 GDP to have slowed 4.3%. The shilling closed about flat at 106.4576 to the dollar while KENINT 32s were trading about flat in the mid 99s.