US equities choppy, bonds yields rise as oil prices decline on imminent supply glut

US Stocks traded in a volatile session but still finished lower as investors analysed hawkish signals from the Fed and other central banks over their plans to combat rising inflation coupled with a drop in oil prices. Consequently, US stock prices closed negative yesterday with S & P 500 down 0.75% to close at 4,101.23, DOW at 32,813.22, down 0.54% and NASDAQ 100 down by 0.72% to 11,994.46 while futures which show likely opening levels for equities are currently positive with the S&P Futures up 0.38% (4,114.50), DOW Futures 0.22% (33,873.00) and NASDAQ Futures at 12,622.75, up 0.58%. The yield on 10-year UST’s rose 3pbs to 2.91% amid Fed’s impending shrinking of its balance sheet, at the same time, Gold rose 0.3% to $1,851.22 an ounce. Meanwhile, Brent crude fell 1.7% to $114.32 per barrel on news that Saudi Arabia may pump more oil if Russian output declines.

Bunds open slightly weaker following the trend from yesterday. The 10Y touched a high of 1.20% before dropping to 1.19%, 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open; 10Y BTPs yields went as high as 3.15% before retreating to 3.14%, 1 basis point firmer intraday. Stocks open higher as investors continue to gauge central Banks’ hawkish campaigns to quell inflationary pressures. Consequently, the Stoxx 600, opened higher at 440.68 compared to previous session’s closing of 448.17.

Activity in the Nigerian local Secondary Market for Bonds had bullish sentiments amid a relatively buoyant Money Market liquidity. We saw demand seep into the market mainly across the short to mid end of the curve while the long remained mostly steady. Intraday, average yields were down 4bps across the curve. Consequently, FGN 26s closed at an offer rate of 10.30%, down 5pbs from previous session’s level of 10.35% while 50s closed flat at an offer rate of 13.05%. Activity in the Secondary Market for Treasury bills was relatively quiet although system liquidity of stood at over N450bn. We saw mixed sentiments across most of the curve. Day-on-day, average discount rates were mostly unchanged. Consequently, discount rate on 11th Aug 2022 NTB and 29th of August 2022 SPEB were at 3.20% and 3.65% respectively. The exchange rate between the naira and the US dollar closed at N419.14/$1 at NAFEX compared to previous session’s level of N419.38/$1, an appreciation of circa 0.06%.