US-China Tensions

The new round of Sino-US tensions started after the US closed Chinese diplomatic mission in Houston over spying concerns along with a statement from President Trump about the possibilities of closing more missions. Chinese officials responded with closing US consulate in Chengdu. Despite the rising political tensions, the US stock market closed higher on Wednesday supported by domestic corporate earnings date – S&P gained 0.6%, NASDAQ appreciated by 0.3%. The yield on 10Y USTs lost 0.3 bps to 0.599% level.

Chinese stocks are trading lower today led by political issues. CSI 300 fell more than 2% as some local investors believe that situation will get worse before it gets better. However, Hong Kong’s Hang Seng is trading 0.5% higher today.

Oil was trading lower on Wednesday, Brent closed 0.2% lower, WTI lost 0.3%

President Putin gave his government the green light to consider hedging Russia’s oil and gas export revenues to protect the country from price volatility. The hedge would be an additional tool to support the sovereign wealth fund when oil prices fall. RUB lost 0.6% to 71.1 vs USD on Wednesday while the sovereign Eurobonds traded .25-.625 bps lower in terms on price along the curve.

On SSA Eurobond space we saw a big upper move in ANGOL bonds as well as GHANA 51 – bonds appreciated by more than 1 point, while NGERIA bonds added 50 bps pricewise on average supported by global risk on tone.