Yesterday, the UST curve hardly moved, with the 2-year rate sliding 1bp to 1.17% and the US 10YT rising 0.61 bp to 1.795%. The yield on the 10-year Bund increased 3bp, ending at 0.03%. The US manufacturing ISM index fell 1.2 points to 57.6, almost estimated. This was the index’s third consecutive monthly fall, although it remains at a high level, reflecting solid business activity. This was a partial average drop in the contract index, although it remains at a high level, reflecting robust business activity. The CPI continued to rise, accompanied by demand at 7.9 points per month, due to the rally in the oil market. S&P500 (SPX) rose at 0.69% to 4546.54, NASDAQ (NDX) showed an increase in 0.75% to 14346.0.

Meanwhile, European markets closed higher with the CAC40 outperforming its peers and closing +1.43% higher as French annual inflation came in at 3.3%, down from 3.4% in December. DE 10YT goes up to 0.037% from 0.011%. European core rates were catching up to the early UST widening, as investors priced in a larger possibility of the ECB initiating policy tightening this year in response to Europe’s increasing inflation.

In CIS Region both UKRAIN and RUSSIA were the outperformers of the space, benefitting from some easing in the geopolitical space. RUSSIA saw +0.8-1pts move in the belly of the curve and UKRAIN traded up around 0.5pts in the same duration space. KAZAKS curve was the underperformer with the long end seen down around half a point on the day the rest of the space was roughly unchanged with notable demand however seen across the BELRUS curve. Across the financial space VTB 9 ½ PERP was a notable performer with the paper seeing a big demand across real money and offers seen lifted, the paper is up around 2 points in a week, SOVCOM 7.6 PERP on the other side was the underperformer with bids very hard to find in the market and sellers dominating.

Latam saw some positive tone in trading yesterday with BRAZIL outperforming, where the demand and some short squeezing driving the spreads 5-7bps tighter on the day, COLOM and MEX also saw some positive moves, both 3-4bps tighter in spread on the day. Corps followed the sovereigns, with PETBRA and PEMEX saw some street lifting with PEMEX 35 trading at 93.6 levels. PERU was the underperformer of the sector, widening 4bps in spread on a 10Y on the day after some headlines of the Prime minister resigning after the interior minister crisis hit the newsfeeds.

In MENA region, the GCC credit felt much more stable this week with bids appearing in the market together with rates volatility subsiding. In HY space EGYPT and PKSTAN were the most sought after, with the former tightening around 20-40bps in yield terms in the curve bell, and the new PKSTAN 29s trading 3pts above reoffer. BHRAIN and OMAN were also roughly 10-15 bps tighter. In IG space KSA and ADGB also saw some positive momentum on the steadily higher oil prices, however with both curves 5-10bps tighter on the day only in the front ends. The long ends remained largely unchanged, seeing some pressure from the benchmark rates moves.