US stocks finished mixed and Bonds yields went southwards as markets gauged ongoing effects of Fed’s plan to control inflation and the possibility of an economic slowdown. Consequently, the S & P 500 gained 0.25%% to close at 4,001.05, Nasdaq 100 rose by 0.98% to 11,737.67 while DOW dropped 0.26% to close at 32,160.74. The yield on 10-year USTs declined 5pbs to 2.94% on hopes of a moderated inflation print due tomorrow. Brent rose 2.3% to $104.78 per barrel as uncertainties over disruptions in crude oil flows due to ongoing geopolitical tensions. Meanwhile Gold rose 0.7% to $1,850.27 an ounce. Investors are optimistic that a soft inflation print (which analysts expect) will come as a relief and may require the Fed to be less aggressive in hiking interest rates.

European natural gas prices have jumped as much as 6.8% after Russian transit flows in Sokhranivka, one of the key entry points in Ukraine, were stopped by Ukrainian operators due to security concerns. As the flows increased via another border point, Sudha, gas prices dropped paring gains to 1.5%. Kyiv had warned Russia that actions of its troops could halt a third of the gas it transits to Europe. Meanwhile, EU drafted a $205 Billion plan to bolster renewables and energy saving goals to end its dependency on Russian fossil fuel by 2027. As fighting went on with Russian missiles hitting the port of Odessa, Ukraine claimed new battlefield gains pushing invading troops from four villages near Kharkiv. Russian markets have opened mostly lower after holidays with Russia’s MOEX losing 0.3% this morning to 2410. Norilsk Nikel, Sberbank, Yandex and Novatek lead the declines. Ruble was down 30 kopeks against the USD with USDRUB up at 69.65. With oil and gas prices climbing, corporate bonds of Russian energy companies were also up with GAZPRU 2 ¼ 07/19/2022 up from mid 60s to low 70s and LUKOIL 6.656 06/07/2022 up in mid 80s. Russian sovereigns also gained with Russia 28 trading in high 30s and Russia 47 in mid 20s. Meanwhile, Kazakh President Tokayev and his Turkish counterpart Erdogan agreed to expand strategic partnership signing agreements worth $1 Billion in Ankara. Kazakhstan offered to create a favourable climate for Turkish investors and support their initiatives. Sovereign KAZAKS 45 had a muted reaction and traded at around 109.50.

Bunds open stronger following the trend from yesterday. The 10Y touched a high of 1.02% before dropping to 0.98%, 4bps down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open; 10Y BTPs yields went as high as 2.94% before retreating to 2.86%, 8 basis points firmer intraday. Stocks open higher as investors focus on US inflation report for hints on the direction of monetary policy while keeping in mind increasing commodity prices and worries of a recession. Consequently, the Stoxx 600, opened higher at 422.45 compared to previous sessions closing of 420.29.

NGERIA underperformed the space yesterday shedding 0.875pts with the downgrade on JPM’s EMBIG from Overweight to Market weight/Neutral adding to the recent selling pressures. ETHOPI was similarly weaker having missed FDI targets by a third over the 9 months to April. A generally sluggish start to the space ahead of US CPI figures later in the day.

Activity in the Nigerian local Secondary Market for Bonds was relatively calm. We saw improved offers across the short to mid end of the curve with few trades done while the long end remained stable. Intraday, average yields were up by 3bps across the curve. Consequently, FGN 24s closed at an offer rate of 7.70%, up 10pbs from previous session’s level of 7.60% while 32s closed at an offer rate 12.42% up 2pbs from previous session’s level of 12.40%. Secondary Market for Treasury bills had mixed sentiments ahead of the upcoming NTB auction. Demand trickled in around the short end of the curve while the mid to long end had bearish undertones.  Day-on-day, average discount rates were slightly changed across the curve. Consequently, discount rate on 6th June 2022 SPEB closed at 2.85% from a previous level of 3.00% while the new 1-year NTB was stable at 4.50%.  The exchange rate between the naira and the US dollar closed at N417.27/$1 at NAFEX compared to previous sessions level of N417.11/$1, a depreciation of circa 0.04%.