UK Retail Sales Return to Growth


US stocks were mostly higher to kick off the week despite the rising Sino-US tensions. The DOW rose 1.30% while the S&P was up 0.27% – a seventh straight session of gains; the NASDAQ was lower however at -0.38%. Yield on 10Y USTs closed higher at 0.5755%.


UK retail sales returned to growth on an annualised basis in July according to the KPMG-British Retail Consortium report. Sales grew 3.2% with growth noticed in home improvements. Online sales continued slowing, coming at 42% having risen as high as 70% in April. The pound closed higher at $1.3073 while yield on 10Y UKTs closed lower at 0.131%.


Asian stocks were higher on Tuesday amid indications that talks for another US stimulus package may resume as well as remarks by President Trump that he is planning tax cuts. The NIKKEI resumed trading on a high, up 1.88% while the HANG SENG and the ASX rose 2.11% and 0.46% respectively. The CSI was lower however at -1.15%.


The CBRT will cease OMO operations that had been providing cheap liquidity to primary dealers on 12 August, a move that is expected to push the cost of borrowing higher. Interestingly, the move comes just after President Erdogan called for even lower borrowing costs as the CBRT has held the Turkish benchmark rate for two straight meetings. The lira traded as low as 7.3459 vs the dollar on the announcement, having closed at 7.2835 on Monday.


The latest weekly central bank survey of Brazilian economists saw expectations of various measures held constant save GDP; the survey saw GDP growth forecast marginally higher at -5.62% from -5.66% last week. End-2020 inflation forecast remained at 1.63% despite a pickup in July to 2.31% YoY and concerns over how the latest Selic cut – to a record low 2% last week – may spur excessive inflation as the economy reopens. The real closed weaker at 5.4813 to the dollar while BRAZIL 30s were higher, trading in the low 104s.


Protests in Belarus continued for a second night on Monday following the weekend elections that saw President Lukashenko claim a landslide victory. The opposition said it would challenge the results and called for talks to quell social tensions. Eurobonds continued their slide with BELRUS 31s over a point lower on Monday, trading in the high 96s.


The Paris Club announced late on Monday that it had suspended Zambia’s debt service payments until end-2020 with the suspension effective in retrospect on May 1. The statement also did not rule out an extension of the suspension period with the Club saying it would coordinate with relevant stakeholders to that effect. ZAMBIN 27s were little changed at market open, having traded higher on Monday in the mid 58s.