US stocks started off the week on a soft note with the Fed tapering back to the fore on investor minds; this followed comments by Treasury Secretary Janet Yellen on Sunday that higher interest rates would be welcome. The NASDAQ (+0.49%) made the only gains of the day while the S&P and the DOW shed 0.08% and 0.36% respectively. Yield on 10Y USTs closed 1.5687% higher.

British retail sales rose 28.4% for the month of May according to a release by the British Retail Consortium; the figure follows another strong sales figure for April as lockdown restrictions eased across the country. Online sales remained firm registering a 39% growth, albeit lower than the 3-month average of 64%. Clothing sales more than doubled for the month while restaurant sales were 53% lower than the May 2019 figure. The pound closed firmer at $1.4183 while yield on 10Y UKTs was slightly higher at 0.806%.

German industrial production fell 1% in April against an expected 0.5% growth as recovery in the eurozone’s biggest economy continues to stutter; interestingly, the contraction happened even as the March figure was revised downwards to 2.2%. The slump was mostly driven by construction activity which slumped 4.3%. Bond yields were in turn lower on the news with the 10Y at -0.207% (-9bps) at 9am CET.

Asian stocks were mostly lower on Tuesday following Wall Street’s mixed performance. The CSI led losses, down 0.88% while the HANG SENG closed 0.11% lower. The NIKKEI also shed a comparatively modest 0.19% as Q1 GDP contracted less than expected; production contracted 1.0% against an expected 1.2% slump. The ASX was the bright spot in the space however, edging up 0.15%.

The lira led gains among EM currencies on Monday marking a turnaround from the previous week where President Erdogan’s policy pronouncements had the currency in free fall. The currency gained 0.6% against the dollar amid expectations that a meeting with US counterpart, President Biden, would be held on the sidelines of next week’s NATO meeting, potentially deescalating tensions. In addition, Germany upgraded Turkey’s COVID-19 risk status to normal spurring the benchmark Borsa Istanbul to gain 0.9% with Turkish Airlines gaining 1.9% on expectation of increased tourist activity.

Russian inflation slightly overshot expectations in May, rising 6% YoY against an expected 5.8%. The print raised expectations that the bank of Russia will move more aggressive to raise interest rates at the Friday meeting with inflation now way above the target 4%. While a Bloomberg survey has a median forecast of a 0.25% increase, some banks including Morgan Stanley have now upped their estimate to 0.50%. The ruble closed about flat at 72.8219 to the dollar as did RUSSIA 30s which traded in the mid 115s.

The IMF approved a $650 million facility to Senegal after completion of a review of a policy coordination programme. The 18-month programme will see the country receive an immediate $187 million and should help shore up the country’s accounts after it tapped the markets for €775 million last week in a Eurobond offering. SENEGL opens the tightest consequently, with bonds trading .375 higher.