US stocks wobbled, and Treasuries yields rose due to comments from FED Chair Jerome Powell that suggested a more hawkish stance than after last week’s FOMC meeting. Powell stated that the Fed is ready to hike interest rates by 50 bps at the next policy meeting if necessary. The S&P 500 fell 0.04% to 4,461.18 while Nasdaq 100 dropped 0.3% to 13,838.46. The yield on 10-year UST’s rose 3pbs to 2.32% while Gold was at $1,935.67 an ounce. Crude oil prices continued to rise, with the ongoing war in Ukraine and possibility of a cease fire not happening any time soon. Consequently, WTI crude rose 2% to $114.40 per barrel as uncertainty over supplies persisted. Also, there are signs the EU may be placing a ban on Russian crude imports to punish Moscow for its attack. Investors continue to monitor markets closely as the FED and other major central banks contend with high inflationary pressures and disruptions in commodities supply due to the war.
Hawkish comments from Fed’s Powell pushed core rates higher late on Monday with 10Y DBRs selling about 10bps to close at 0.470%, little change at the open on the same. Peripherals also moved likewise with 10Y BTPs shedding some 11bps to close at 1.921%; a similarly muted open as well to these. Equities managed to just hold in the green however with the Stoxx 600 gaining 0.19% having been equally roiled by Powell’s comments to pare earlier gains; the index opens firmer, up 0.24% at 08.10GMT
OFZs resumed trading on the down foot as the MICEX resumed trading on Monday. The RGBI index dropped to 98 at the open from 110 when it last traded on February 25 before paring the losses and closing at 102.5. Based on MICEX data volume amounted to no more than 14 billion rubles. On the FX front, RUBUSD slightly strengthened from 104.8 to 104 while RUBEUR fell more than 5% from 111.5 to 117.5. Eurobonds were also heavy with the RUSSIA 28 down to 45 from 47, while RUSSIA 47 was similarly down to 22.5 from 25. Corporates had a mixed showing – PGILLN 3 ¼ 2028 slid from 32 to 29, while LUKOIL 3 ⅞ 2030 rose from 56 to 57.5. Meanwhile, Evraz PLC and Severstal PJSC reported that coupons had been paid through correspondent banks, but bondholders were still awaiting overdue payments. The talks between officials from Russia and Ukraine on Monday lasted an hour and a half. Later President of Ukraine Vladimir Zelenskyy said he would be ready to discuss the issues of Crimea and the recognition of the Donetsk and Lugansk Republics with Russia after the Ukrainian side receives security guarantees.
NGERIA (-0.75) leads losses at the open as the SSA space continues its downtrend following Fed remarks that more-than-a-quarter-point hikes are possible. Offers on the new NGERIA 29 have now moved sub-100 (re-offer 100) while long end is particularly selling. Meanwhile the Bank of Ghana unexpectedly raised the key rate by 250bps (expected 100bps) acknowledging the impact of the Russia-Ukraine war on already high inflation; GHANA (-0.50) also selling albeit on a comparatively muted note after sliding 1.75pts on Monday.