US stocks recorded their worst session since June 2020 on Tuesday following a CPI overshoot; headline inflation for August was up 0.1% against an expected 0.1% decline while the core component shot up 0.6% against an expected 0.3%. The NASDAQ led losses, down 5.16%, while the S&P and the DOW were 4.32% and 3.94% lower respectively. 10Y UST yields whipsawed some within a 15bps range before ultimately closing 4bps higher at 3.408%.
Ukraine appealed for more weapons, along with continued US support, to build on successes over the weekend in fighting Russia in the Kharkiv region. Russia has likely ordered the withdrawal of its troops from the occupied Kharkiv Oblast west of the Oskil Rover, according to the UK ministry of defense. In the meantime, the head of the EU commission president Ursula von der Leyen on Wednesday said the successive waves of EU sanctions against Russia for its invasion of Ukraine were here to stay and pledged to work to guarantee access for Ukraine to the bloc’s single market to help its war-torn economy. Russian stocks fell this Wednesday morning as oil and industrial metals declined after higher-than-expected inflation numbers in the US, while gas prices in Europe were little changed amid EU energy intervention plans. Both IMOEX and RTSI were down with a drop of 1.46% in IMOEX to 2,411 and a decline of almost 1% in RTSI to 1,271. Energy giants Gazrpom and Lukoil were among the worst performers along with Sberbank and a metals producer Norilsk Nickel. Russian rouble gained for a fifth consecutive session against the dollar as investors await a Central Bank interest-rate meeting this Friday to clarify on fiscal policy. Both USDRUB and EURRUB were down around 0.1% and trade at 59.74 and 59.85 respectively. A further easing of the monetary policy, which is widely expected, “will lead to a particularly noticeable and sustained weakening of the rouble”, some analysts predict. Russian government bond yields were steady ahead of the Finance Ministry auctions with 10-year benchmark ruble bond yields unchanged at 8.41%. Meanwhile, international investors placed orders for over $1 billion of Russian bonds as a part of a long-anticipated credit-default swap auction on Monday.
SSA opens weaker continuing the selloff that followed the US CPI overshoot on Tuesday. Oilers ANGOL (-.875) and NGERIA (-.75) continue to lead the selling as was the case yesterday when both shed over 2pts from session highs to close at least 1pt down. ZAMBIN (-.125) restructuring expected to result in a super bond maturing 2029 according to analysts.