US stocks closed mostly lower again on Monday as market continues to position for higher rates. The DOW led losses, down 0.45% while the S&P was 0.14% lower. The NASDAQ managed to eke out a 0.05% gain having been down 2.7% at one point in the session. Yield on 10Y USTs closed slightly lower at 1.7551% having whipsawed throughout the session.
Italian BTPS pared last week’s losses on Monday even as the political future of the country shows little signs of certainty ahead of presidential voting later in the month; yield on BTPS 31s closed 2.7bps firmer at 1.284%. With Prime Minister Mario Draghi having shown willingness to be voted into presidency a period of uncertainty could ensue if he is voted into the office as a new government is set up. The euro closed slightly weaker at $1.1326.
Asian stocks were lower on Tuesday in a cautious trading session as markets parsed a resurgence in China’s COVID cases among other headwinds. The CSI in turn led losses, down 0.96% while the NIKKEI lost 0.90%. The HANG SENG was comparatively better, having recovered from a 0.50% retreat earlier in the session to trade about 0.18% weaker as the session ended. The ASX also closed 0.76% down with outperformance in November’s retail sales (7.3% vs expected 3.9%) failing to buoy the bourse.
The latest central bank survey saw Brazilian analysts cut the GDP growth estimate for 2022 to 0.28% from a previous 0.36%. The lower projection – a third straight one – came as the central bank continues to signal yet more rate hikes even as economic recovery start s to falter. The Selic is expected to hit 11.75% end-2022, some 250bps above its current 9.25%, amid a push to rein in inflation which hit 10.42% in December; the BCB is targeting 3.5% this year with a tolerance of 150bps either way. The real closed weaker at 5.6701 to the dollar while yield on BRAZIL 30s was higher, about 4.715%.
Senegal Eurobonds opened firmer reversing Monday’s losses following an IMF statement showing satisfaction with the country’s performance under the current programme; the review means that the country is in line to receive about $180 million under the programme set to end in January 2023. 2021 growth which had previously been forecast at 3.5% was upped to 5% driven by industrial production and services.