The guess for the U.S markets is we all are stuck playing the waiting game now as stocks in the U.S struggled for a bit of direction yesterday with treasuries even holding steady as well mostly due to Wednesday’s decision from the Federal Reserve’s policy meeting with a keen eye also on U.S second-quarter GDP which is due on Thursday. Investors also have an eye on earnings due this week from some of the world’s largest companies, all looking for clues on whether a resurgence of Covid-19 will derail a recovery in the global economy. A drop in U.S. consumer confidence added to evidence that the pace of the rebound may be cooling as the virus interrupts reopening in several states. The Fed has already extended most of its emergency lending programs by three months for the rest of 2020. How could we forget about the fiscal stimulus proposal which was outlined on Monday and still has quite a bit of divisions between the Democrats and Republicans over the extension of unemployment benefits. As earlier stated, it is the waiting game we play now. Yields on 10-year Treasuries was unchanged at 0.58% while the Futures on the S&P 500 Index fell 0.7% after opening at 3,234.27 and closed at 3,218.44.
In Europe, the Stoxx 600 Index did open a bit lower declining by 0.1% as some earnings around Europe rolled in, with Barclays Plc shares slipping after U.K. bank’s provisions for bad loan losses exceeded market estimates. The European Central Bank will also decide when and how to unwind its pandemic stimulus program based mostly on how inflation develops with some suggestions that an emergency asset purchase may continue loner than initially planned.
The same could be kind of said about the markets in Asia as reports of dismal company earnings add to pessimism over the widespread economic fallout from the coronavirus pandemic. Tokyo’s Nikkei 225 index lost 1% after Fitch Ratings downgraded its outlook for Japan to “negative” from “stable.” Fitch said in announcing its decision that, “The coronavirus pandemic has caused a sharp economic contraction in Japan, despite the country’s early success in containing the virus”.
With market’s expectation for another increase in already swelling U.S. stockpiles, oil steadied after an overnight decline as investors shifted their focus to domestic supply overshadowing expectations for a dovish statement from the Federal Reserve. After rebounding swiftly from April lows, crude prices have struggled to find direction in recent weeks as the resurgent pandemic threatens the global energy demand recovery. West Texas Intermediate crude rose 0.2% to $41.1/bbl.
In the Eurobonds SSA space, the NIGERIA Sovs continued to trade on subtle note, although mostly bullish across the entire sovereign curve with more of interest skewed to the long end of the curve and lead to yields compressing by an average of c.5bps across the curve. The short end of ANGOLA Sovs saw willing sellers yesterday, given the scarcity on the short end compared to the long end all coming on the back of Angola’s Finance Minister in talks with creditors to reduce its debt burden and hoping these debt negotiations would lead to significant savings in the country’s budget. Their benchmark interest rate unchanged at 15.50% as of Tuesday.