European car sales slid for a sixth month running in December with the 22% slump recorded being the worst on record. Germany led the slump, with new registrations down 26.9% in the month with manuafacturers bemoaning the chip shortage which is only expected to ease H2 2022. The euro was lower, trading sub-1.14 against the dollar while yield on 10Y DBRs moved lower reversing some early selling.
Asian stocks were lower on Tuesday as treasuries resumed trading on a selling trend. The HANG SENG led the slump, down 0.74% towards the end of the session while the ASX closed 0.12% weaker. The NIKKEI also shed 0.27% as the BoJ upped its 2022 core CPI estimate to 1.1% from a previous 0.9%. The CSI held firm however, gaining 0.97% as Chinese authorities cut the 7-day repo rate by 10bps.
Russian and Ukrainian assets continued their slump on Monday amid a continued troop buildup at their borders. Ukraine’s dollar bonds entered distressed territory, with spreads to treasuries now above 1000bps. OFZs – which are 5.2% lower in 2022 and have the deepest slump in local debt so far – showed little signs of recovery with yield on RFLB 31s up 20bps to trade above 9.5%. RUSSIA Eurobonds appeared to have some respite late in the session though as reports filtered through that the EU and the US may not press ahead with unplugging Russia from the Swift payments system; the 30s pared early losses on the news to close about 10bps tighter than session yield highs.
Brent crossed $88/bbl in early trading – the highest since 2014 – as geopolitical tensions in the aftermath of an attack in UAE ratcheted tensions in the Middle East. The attack, claimed by Yemen’s Houthi fighters – was at the Abu Dhabi airport and at a nearby industrial area. Brent is up over 2% so far this week.