US stocks closed in the green on Monday shaking off early weakness tied to weak Chinese data and tensions in the Middle East. The DOW and S&P rose 0.31% and 0.26% respectively to mark 5 straight green sessions having reversed early losses. The NASDAQ was however lower at 0.20% with a rally in big tech later in the session proving insufficient to reverse the early slide. Yield on 10Y USTs closed lower at 1.2650%.
The UK posted strong job numbers in its June data with companies posting more than a million job openings for the first time. Earnings in the 3 months to June rose a record 8.8% YoY, topping the 8.6% estimate. While the job numbers mean support for the unemployed may be taken off sooner, the BoE is concerned that wage pressures will feed into inflation which breached the 2% target in May and June; economists expect the July reading, to be released on Wednesday, to ease slightly. The pound opened weaker, trading sub $1.38 while yield on 10Y UKTs was about 0.55% in early London trading, some 2bps lower than Monday’s close.
Asian markets were lower on Tuesday, failing to weather concerns about the Afghanistan turmoil and unease about the outlook for the Chinese economy following weak July data. The CSI slid the most, shedding 2.10% while the HANG SENG was trading 1.65% towards the close of the session. The ASX managed to pare some losses to close 0.94% down while the NIKKEI lost early gains to close 0.36% down.
Brent reversed some losses on Monday to touch the $70 mark following OPEC+’s insistence that it would not pump more oil to markets despite the White House’s urging. The reverse was short-lived however, with the benchmark closing lower at $69.51 before continuing lower on Tuesday as delta variant concerns continue to linger.
Brazilian economists pushed their end-2021 forecast of the Selic to 7.5% according to the latest BCB survey with inflation also being pushed to 7.05% to mark a 19th straight increase in expectations. The upped forecasts follow continually heating inflation with July figures hitting 8.99% as energy costs continue to soar. The central bank has said it will continue steep hikes to the Selic in a bid to rein in inflation which is now more than double the bank’s 3.75%. Yield on BRAZIL 30s was little changed, about 3.84%.
Zambian assets rallied on Monday following the official announcement of Hakainde Hichilema’s victory in the previous week’s presidential elections; with his party also taking a majority in Parliament, the new administration will thus have the numbers to make policy changes. Zambian Eurobonds rallied upwards of 7.5pts on Monday trading at levels last seen 2019 with analysts even recommending that investors take up local kwacha-denominated ones.