US equities mixed, bonds waver amid optimistic earnings reporting

U.S. stocks were mixed at a time of growing confidence for another vibrant earnings-reporting season. The S & P 500 shed 0.06% to close at 4,459.45, Nasdaq 100 decreased by 1.22% to 13,453.07 while DOW was up 0.71% to close at 35,196.79. The yield on 10-year USTs rose 3pbs to 2.87%, as traders continued to consider whether inflation had peaked or not. Brent crude rose 1.9% to $108.80 per barrel as uncertainties over supply persisted due to ongoing geopolitical tensions while gold fell 0.4% to $1,950.64 an ounce as demand eased. Meanwhile investors will be on the lookout for pointers on what central bankers are thinking concerning interest rates and inflation when Fed Chair Jerome Powell and European Central Bank President Christine Lagarde discuss the global economy at an IMF event later today.

US has imposed fresh sanctions on Russia, including sanctions on a cryptocurrency miner. The officials form the Group of Seven nations said that the sanctions imposed on Russia “are already having the intended massive impact”. In the meantime, UN secretary-general sought meetings with Putin and Zelensky, as Russia stepped up its military operation in the east. Russian rouble continued to strengthen with USDRUB down 2 roubles to 76.41. MICEX has finished mostly in red with IMOEX losing 1.5%. Russia 28 was slightly up at 26.65 and Russia 47 was flat at 19.5. VTB Bank made coupon payments for its Eurobonds in roubles, using the same payment mechanism as the Russian Ministry of Finance. VTB 6.95 10/17/2022 stayed flat and is trading around 8 now. Novatek has applied for a waiver of the moratorium on filing bankruptcies, which was introduced by the Russian government.  NVTKRM 22 dropped from 45 to 43.75 on the news.

Bunds open weaker following the trend from last session. The 10Y touched a high of 0.934% before dropping to 0.922%, down 1bp day-on-day. Peripherals mirrored the move on bunds with a weak open; 10Y BTPs yields went as high as 2.50% before retreating to 2.48%, 2 basis point firmer. Stocks were stronger as investors pondered over hawkish comments from ECB officials as opposed to a bright start to the corporate earning season. Consequently, the Stoxx 600, opened at 461.87 compared to previous sessions closing of 460.10. In other news, Bank of England’s Andrew Bailey is expected to speak, Friday.

The firming in the space continues at the open following Wednesday’s late surge. GHANA (+0.25) buoyed by GDP outperformance in Q4 in addition to the overall turn in market sentiment. KENINT remains subdued however even as the IMF maintained 2022 growth at 5.7% in the latest World Economic Outlook Update; most countries in the space saw growth projections revised downward.

Bearish activity in the Secondary Market for Bonds eased today across most of the curve amid a relatively feeble system liquidity. There was fresh demand for Bonds on the short and long end of the curve while the mid end remained relatively stable. Intraday, average yields declined by 4pbs across the curve. Consequently, FGN 24s closed at an offer rate of 7.70%, from previous day’s level of 8.00% while 50s closed at an offer rate 12.94%, compared to previous days rate of 12.97%. Secondary Market for Treasury bills was mostly tepid across the curve except for some demand that trickled in for May to August Treasury bills. However, day-on-day, average discount rates were mostly unchanged across the maturities traded. Hence, discount rate on 23rd February 2023 NTB remained at 4.20% while 24th of November 2022 Bill was at 3.25%. The exchange rate between the naira and the US dollar closed at N418.33/$1 at the official I&E window compared to previous sessions level of N417/$1, a depreciation of circa 0.32%.