US equities mixed; bonds stable but under pressure on FED`s imminent faster rate hikes

U.S. stocks closed higher while Bonds were relatively steady amid boost in earnings season, in spite of more hawkish tone by the fed. However, futures fell as investors considered the effect of rising real yields on the appeal of risk assets. Although US stock prices closed positive yesterday with S & P 500 up 1.61% to 4,462.21, DOW at 34,911.20, up 1.45% and NASDAQ 100 up by 2.15% to 13,619.82.66, futures which show likely opening levels for equities are currently negative with the S&P Futures down at 0.33% (4,444.50), DOW Futures 0.14% (34,795.00) while NASDAQ Futures at 14,122.75, down 0.68%. Treasuries were relatively firm but remained under pressure from expectations for quicker Federal Reserve interest rate increases. Consequently, the yield on 10-year Treasuries dropped marginally by 2 basis points to 2.92% while Gold lost 0.3% to $1,943.35 an ounce. Meanwhile, oil prices bounced back with Brent crude rising 1.2% to $108.54 per barrel following reports indicating a drop in US stockpiles.

The Central Bank of Russia is continuing to ease currency controls for certain types of companies. These companies will now have up to 60 days to sell their foreign earnings instead of 3 days required earlier. Following the news, Russian rouble has strengthened by 1.25 roubles against the US Dollar and is now trading at around 78.50. The main oil and gas exporters still have to convert 80% of their export revenues into roubles. OFZs have gained back what has been lost in February with RGBI up 1.5%. An unexpected interest rates’ cut down to 17% on the 8th of April has helped the move. The next CBR meeting is due on the 29th of April, where a further interest rate cut is expected. Meanwhile, IMOEX remained under pressure and lost 1% down to 2317.46. Russia 28 and Russia 47 were mostly flat at 25.50 and 19 levels respectively. According to an updated World Economic Outlook published by IMF on Tuesday, Russian economy is expected to decline by 8.5% in 2022 and 2.3% in 2023, but it is difficult to give a true estimate at this time.

Bunds open weaker following the trend from last session. The 10Y touched a high of 0.94% before dropping to 0.90%, down 4bp day-on-day. Peripherals mirrored the move on bunds with a weak open; 10Y BTPs yields went as high as 2.48% before retreating to 2.40%, 8 basis point firmer. Stocks were stronger as a stream of corporate earnings gave investors some comfort that profits may tame economic problems. Consequently, the Stoxx 600, opened at 458.29 compared to previous sessions closing of 456.28.

A lacklustre trading session in the space on Tuesday as markets resumed in full weighed down by rates selling; US10Y closed 8.4bps higher. KENINT (-1.50) led losses in the space with NGERIA (-1.00) in pursuit during a session where flows where largely selling. IVYCST (-0.625) had comparatively muted selling as a new government was sworn in with Tiemoko Kone – current governor of the Central Bank of West African States – appointed as vice president and as such the most likely successor to President Ouattara. The weakness in the space continues at the open.