US equities mixed, bonds yield rise on inflation risk & earnings season

US bonds yield climbed, and Stocks were mixed as investors gauged inflation risks against the beginning of the earnings season. Although US stock prices closed negative yesterday with S & P 500 down 0.34% to 4,397.45, DOW at 34,220.36, down 0.26% and NASDAQ 100 down by 0.30% to 13,371.57, futures which show likely opening levels for equities are currently positive with the S&P Futures up at 0.51% (4,416.25), DOW Futures 0.42% (34,286.00) while NASDAQ Futures at 14,048.00, up 0.73%. The yield on 10-year USTs added 4bp to 2.76% while Gold remained stable at $1,969.40 an ounce.  Oil prices declined amid Russian President Vladimir Putin’s promise not to end the war in Ukraine any time soon and China’s partial easing of Covid restrictions. Consequently, Brent crude fell 0.3% to $104.32 per barrel. Investors are hoping that the US inflation has peaked but still worried about rising interest rates and fresh covid lock downs in China. Meanwhile, Fed Governor Lael Brainard said the United States central bank will act promptly to hike rates to a level that neither stimulates nor slows down the economy this year.

Since the beginning of Russia’s military invasion to Ukraine, companies across the world have come under an increased pressure from governments and shareholders to abandon their stakes in investments related to Russia. Vitol Group, world’s largest independent oil trader, was one of the latest high-profile companies with its plans to stop trading Russian oil by the end of this year. Indian state-owned Oil Corporation has excluded the Russian URALS from its latest tender due to its high sulphur content. US Secretary of State, Anthony Blinken, urged India earlier not to buy oil products from Russia. IMOEX lost 0.6% yesterday and closed at 2540, while USDRUB rose from 79.06 to 79.86. S&P has downgraded the Petropavlovsk gold mining company’s rating to selective default due to a missed interest payment on loans to Gazprombank. The UK entity of the group, Petropavlovsk Ltd., is unable to pay Gazprombank, because it is included in the UK’s sanctions list. Following this news, POGLN 8 ⅛ 11/14/2022 fell from 29 to 20. Russian government bonds continued trading flat with Russia 28 at around 25 and Russia 47 at 19.

Bunds open weaker following the trend from yesterday. The 10Y touched a high of 0.859% before dropping to 0.826%, down 3bps. Yields continued the upward trend amid the UK inflation figure for march that rose to 7%, a rate not seen in 30 years. Peripherals mirrored the move on bunds with a relatively weak open; 10Y BTPs yields went as high as 2.40% before retreating to 2.36%, 4 basis points firmer. Stock was little changed; the Stoxx 600, opened at 456.57 about where it closed yesterday.

SSA opens tilted towards the downside as core rates unwind the post-CPI rally. US inflation came within expectations on Tuesday prompting rates to rally and in turn improve sentiment on risk assets. The space finished off the day’s lows albeit still in the red. SOAF (+0.25) staged a comeback however with the new notes bid as much as 50c above reoffer having traded as low as 99.75 (reoffer 100); it opens on firm note.  ZAMBIN (+0.125) the only other positive open in the space.