US equities decline, bonds gain amid concerns about economic growth

US stocks finished lower on fresh apprehension about economic growth as the Federal reserve continues to pursue its monetary policy tightening campaign to quell mounting inflationary pressures. Consequently, the S & P 500 lost 2.01%% to close at 3,821.55, DOW declined 1.56% to close at 30,946.99 while Nasdaq 100 dropped by 2.98% to 11,181.54. The yield on 10-year USTs declined 3pbs to 3.15%, at the same time Gold was steady at $1,819.00 an ounce. Meanwhile, Brent crude fell 0.6% to $117.29 per barrel.

Group of Seven nations have moved forward to curb oil and gas prices to limit Russia’s energy revenue. Russia, however, is getting higher prices for its oil as strong demand in Asia undermines the West’s efforts to limit Moscow’s revenues. Meanwhile, Finland and Sweden have cleared a major hurdle to become NATO’s members after Turkey dropped its opposition to their bids. Russian stocks fell for a second day as oil slid and global sentiment worsened on worries about economic growth. IMOEX lost 0.85% this Wednesday morning to 2338 with Sberbank and oil companies Lukoil, Tatneft, Rosneft and Surgutneftegaz among the worst performers. Investors in Russian debt caught in the web of international sanctions, that pushed Russia into default on bonds payment can come together to declare the debt fully and immediately repayable, but they may be in no rush, as there is a chance that international penalties are eventually removed, and they will get paid in full. Benchmark Russia 28 and Russia 47 continued trading unchanged with Russia 28 offered in high 30s and Russia 47 in high 20s. Speaking at a business event in Russia, the finance minister Siluanov indicated that Russia is open to further easing of capital control and may cut mandatory sales of export revenue. In the meantime, ruble continued its rally to its strongest level in seven years, nearing 50 against the dollar for the first time since May 2015. EURRUB climbed beyond 53 for the first time since April 2015.

Bunds open stronger retracing trend from yesterday. The 10Y touched a high of 1.62% before dropping to 1.60%, 2bps down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open;10Y BTPs yields went as high as 3.43% before retreating to 3.41%, 2 basis points firmer intraday. Stocks open lower on concerns about a likely economic recession coupled with China’s resolve to its Covid zero strategy. Consequently, the Stoxx 600, opened lower at 412.79 compared to previous session’s closing of 416.18.

GHANA (+0.25pts) breaks the run of losses to open firmer even as e-levy revenue falls short of forecast. NGERIA opens flat having been well bid short to belly tenors from Monday with fuel subsidies topping an equivalent $1 billion for a second straight month in April. The rest of the space opens weaker with ANGOL (-0.375pts) continuing its heavy run.

Activity in the Nigerian local Secondary Market for Bonds was mostly bearish amid a lingering frail system liquidity. We witnessed selloffs mainly around the short end and long end of the curve while there was a bit of cherry picking around the mid end. Intraday, average yields were up by 2 basis points across board. Consequently, FGN 26s closed at an offer rate of 10.17%, 2 basis point up from previous level of 10.15% while 42s closed at an offer rate of 13.07% 1 bp down from previous level of 13.08%. Activity in the Secondary Market for Treasury bills was also bearish as weakness in Money Market liquidity persisted. Selloffs continued today as Banks continued to generate liquidity to fund their obligations. Day-on-day, average discount rates were mostly higher across board. Consequently, discount rates on 29th of August 2022 & 28th of November 2022 SPEB were at 5.65% and 6.05% respectively. The exchange rate between the naira and the US dollar closed at N420.05/$1 at NAFEX compared to previous session’s level of N418.82/$1, a depreciation of circa 0.29%.