The risk on mood of Wednesday spilled over into Thursday and we ended up with having a green-coloured day yesterday, although with much calmer moves. US Initial Jobless claims data failed to buoy markets, with initial claims coming as a small miss (1.3m vs exp. 1.25m) although retail sales data posted a surprising 7.5% rise vs 5% exp. Coronavirus data also remained bleak in the US (Texas and California both recorded record tallies in new infections). Equities closed flat to slightly negative on the day (SPX -0.34%, NDX -0.7%, DAX -0.4%); however, all ending the week higher (SPX +1.45%, NDX +1.52%, INDU +2.56%). USTs held onto the gains with 30Y yield ending the day at 1.31%, 2bps down on the day. Oil was also slightly weaker after the push on Wednesday, Brent ending the day at $43.2/b levels, down from $43.8/b highs the day before.


As expected, ECB made no policy changes in the yesterday’s meeting, rates are set to stay very low and further TLTRO-IIIs and significant asset purchase (APP and PEPP) still to come. The focus today shifts to the EU summit kicking off today, and although no deal is expected to be reached in this meeting, investors will be looking for signs of the willingness of leaders to compromise and approve the proposed recovery plan. In other news, Boris Johnson is expected to unveil a new £3bn funding package to help prepare the NHS in case of a second wave of COVID. DBRs rallied yesterday after a volatile Thursday with 10Y yields dropping 4bps to as low as -0.48%, although ended the day with a bounce back at -0.46%. GGB curve steepened yesterday with GGB 30s yield shedding 5bps while GGB 42s stayed marginally unchanged. The rest of periphery however continued to move with DBRs, with SPGB 48s, PGB 45s and BTPS 49s losing 2-3bps in yield from the highs of yesterday to end the day at 1.16%, 1.175% and 2.12% yield respectively.


In MENA yesterday the flows were mixed. In HY, BHRAIN, OMAN and JORDAN saw better bid, with the curves up 0-50c; while EGYPT underperformed, trading down 50c-1pt as the headlines noise about the DAM and Libya is heating up. BTUN also ended the day abt 1pt lower on the day as the news broker of the PM resignation. The bonds however were seen well bid at the lows, pushing the bonds up 1-1.5pts from the early lows, although not enough to fully offset the day’s downward move. In IG, the day seemed quiet. The new Sharjah bond (SHJGOV 50), the first non-sukuk issue for the country, continues to trade below reoffer, although the offers are back to par levels today. QATAR continued to be bid, however some sellers finally came out with bonds, with the curve ending the day flat/+25c higher. A similar picture seen in KSA curve as well with KSA 60s seen trading at mid-122 levels.


In Latam yesterday, an impressive performance continued in COLOM long end, with COLOM 51 gaining another 1.5pts (+3pts in 2 days) and was seen trading as high as 104.5, edging slightly lower back to 103.75 bids though later in the evening.  Colombia’s finance minister warned, that given the expected increase in debt levels, Colombia cannot destroy investor confidence and must consider debt sustainability in the long run. The move pushed other IG Sov names higher, with PERU/CHILE/PANAMA/URUGUA all up 75c-1pt in the long ends with better buyers in the market. In higher beta names, ARGENT opened -50c across the curve, however ended the day flat to marginally higher. Sellers were visible in the long end; however, belly was bid. ECUA curve underperformed, finishing the day -50c on light flows. In the Primary pipeline we have new BRASKM subordinated bond, expecting to come to the market next, with the investor calls currently underway.


In CIS, Kazakhstan’s Tengizchevroil (TENGIZ), has tapped the market with a 2-tranche USD deal, issuing $1.25bn across 5Y and 10Y tenors. Both have opened flat and traded below reoffer however, as the significant yield terms tightening from IPTs failed to be offset by demand from investors. Elsewhere, UKRAIN continued its rebound, offsetting some of the last week’s losses, with UKRAIN 30 EUR gaining another point yesterday to 85 levels, as Kyrylo Shevchenko was elected NBU governor surprisingly early by the parliament, a candidate, considered by investors as one of the least likely to arise objections from the IMF. Russia was also in the green with RUSSIA 47 at 136 levels this morning and the whole curve nudging down 1-2bps in yield, following USTs moves. BELRUS was the underperformer with the curve widening 4-6bps.


In SSA, the day was quite yesterday with some small profit taking seen in some names after a decent move higher the day before. Most names however ended the day flat to only marginally lower however, as the flows remained light. ETHOPI was a notable outperformer with the positions being reduced, driving the bonds 50c lower on the back of the Dam and Libya headlines. ANGOL was also down 25c-50c, although the moves felt more technical. Some buying, however, was reported in the belly of the curve by RM and Asian HFs, but the long end continued to be better sold. KENINT outperformed, with the curve up 25-30c on better buying.