US Stocks were stable following the report that China Plans to augment monetary-policy aid to neutralize the effect of covid resurgence due to lockdowns on its economy. China’s recent ordeals have negatively affected the outlook for global economic recovery. The S & P 500 gained 0.57% to close at 4,296.12, Nasdaq 100 rose by 1.29% to 13,004.85 while DOW climbed 0.46% to close at 34,049.46. The yield on 10-year UST was little changed at 2.81% while Brent crude rose 0.8% to $103.13 per barrel due to steadier investor sentiment. Gold rose 0.2% to $1,901.48 an ounce as investors continue to grapple with the risk of an economic downturn from China’s lockdowns and aggressive Fed interest rate hikes.
United Nations Secretary-General Antonio Guterres is due to hold talks with Russian Foreign Minister Sergei Lavrov and Russian President Vladimir Putin today as he seeks to find a solution to the conflict ahead of his visit to Ukraine on Wednesday. According to the Ukrainian military authorities, there was an intense fighting overnight in four regions in the south and east of the country. Sergei Lavrov warned of a “serious” risk of nuclear war over Ukraine, despite signals that the Kremlin is willing to talk to the US to resolve the confrontation. Russian sovereign bonds had a limited reaction and were slightly off with Russia 28 down at 26 and Russia 47 at 19. Rouble kept strengthening with USDRUB down at 73.13, while Russian stocks have lost some value with IMOEX down 2% at 2186.22. After Oleg Tinkov’s statement on the war in Ukraine, where he criticized Russia for its aggression, the TCS Group shares, that belong to his family, fell by 11% and AKBHC 6 PERP fell 3% down to 8.5. Sovcomflot was getting ready to pay $8.3 mln in coupon payments for SCFRU 3.85 04/26/28 but would probably not be able to deliver the payment due to EU and UK sanctions. SCFRU 3.85 04/26/28 was down 19.5. Meanwhile, in a bid to curb growing inflationary pressures, the National Bank of Kazakhstan has raised rates by 0.5% from 13.5% up to 14.00%. Sovereign Kazakhstan bond were mixed with Kazaks 24 up at 102.25 and Kazaks 45 down to 115.25.
Bunds open marginally weaker following the trend from last session. The 10Y touched a high of 0.889% before dropping to 0.839%, down 5bps day-on-day. Peripherals mirrored the move on bunds with a weak open; 10Y BTPs yields went as high as 2.54% before retreating to 2.51%, 3 basis points firmer. Stocks rebounded with Energy and mining firms at the forefront of the recovery. Consequently, the Stoxx 600, opened at 447.81 compared to previous sessions closing of 445.11.
KENINT (+1.25) leading the reversal in the space after an unofficial denial of the previously reported $50,000 daily cap imposed by the central bank for dollar transactions. The reversal started later in yesterday’s session with bonds coming off lows of as much as 3.50pts cash. Also in the tailwinds is an agreement with the IMF to disburse a further $244 million as part of the programme running until June 2024. The rest of the space also buoyed by a turn in sentiment and trading flat to firmer at the open.
Activity in the local Secondary Market for Bonds was mixed amid a relatively weak money market liquidity. We saw improved offers across most the curve except for the long end of the of the curve as market waited for the outcome of the monthly Bonds auction conducted by the DMO. At the auction, a total of N219bn was sold across the 3 maturities offered with stop rates printing at 10% (FGN 25s), 12.50%(32s) and 12.90%(42s). Intraday, yields were up by an average of 2pbs across the curve. Consequently, FGN 35s closed at an offer rate of 12.33%, up 8pbs from previous day’s level of 12.25% while 49s closed at an offer rate 12.85%, down 5bps from previous days level of 12.90%. Secondary Market for Treasury bills was mostly quiet across the curve. Day-on-day, average discount rates were mostly unchanged across the securities traded. Hence, discount rate on 7th February 2023 OMO bill & 7th of March 2023 OMO bill were stable at 4.63% and 4.20% respectively. A total of N120bn will be offered across the 3 tenors (91,182 & 365 days) at the next NTB auction slated for Wednesday 27th of April 2022. The exchange rate between the naira and the US dollar closed at N417.30/$1 at the official I&E window compared to previous sessions level of N418.33/$1, an appreciation of circa 0.25%.