U.S. stocks ended lower on Thursday following Wednesday selloff after the Fed Reserve delivered a third jumbo interest- rate hike and reiterated its commitment to crush inflation, even if it means driving the U.S. economy into a recession. Investors are rattled by the Fed’s so-called dot plot, which tracks forecasts of the benchmark interest rate from individual policy makers. It produced a median forecast for a peak fed-funds rate of 4.6% in 2023, above market expectations. Investors again digested a couple of economic data reports early yesterday, including the latest read on jobless claims, which showed that a new application for unemployment benefits edged higher to 213,000 last week. However, the U.S. labor market remains robust.
Subsequently, Dow Jones declined 0.4% to finish at 30,076.68, S&P 500 declined 0.84% to finish at 3,757.99 while Nasdaq 100 declined 1.37% to finish at 11,066.80. The 10-year yield Treasury advanced 12.9bps to 3.662%. Gold spot price is trading at $1,673.89 per ounce while, WTI crude oil increased $0.61 to $83.55 per barrel.
This Friday Russia began votes on annexing the roughly fifth of Ukraine it occupies with Russian state media reporting overwhelming support for accession to Russia in the four regions that its troops partially control. United Nations Secretary-General Antonio Guterres called these votes a “violation of the UN Charter and international law”. The US and its allies vowed to continue financial and military support for Ukraine, which is pressing its counteroffensive to retake more territory held by Russia. At the same time, Putin’s order to call up as many as 300,000 reservists to fight in Ukraine triggered alarm and demonstrations in 38 Russian cities on Wednesday night with police detaining around 1,400 people. Russian stock market fell this Friday morning heading for the worst week since the February invasion of Ukraine, as Kremlin’s plans for a partial mobilization and annexation of occupied territories worsened the country’s economic outlook. IMOEX lost 3.58% this morning to 2,113 and RTSI dropped 3.4% to 1,135. Energy companies Lukoil and Gazprom were among the worst performers as the prices of oil and European natural gas extended this week’s declines. Gold and silver producer Polymetal fell as much as 4.3%. Fertilizer producer Phosagro was one of few winners and gained 1.2%. Russian currency strengthened against US Dollar for the first time in three days with USDRUB down at around 59 now. EURRUB dropped 0.22% to 57.30. As Russian banks and companies are reluctant to increase their demand for foreign currencies under the current circumstances and exporters continue converting the FX revenues to pay local taxes, ruble will remain supported, some analysts suggest. The yields on the Russian 10-year local bonds soared above 10.6% in September, the highest since April as the escalation of war and lower government revenues threatened Russia’s fiscal stability. They are currently trading around 10.59%.
Another firm open for GHANA (+.75) even as headlines over possible default swirl; Fitch commented that the planned restructuring on GHS debt will put banks under stress with ultimate default a real possibility. The curve tightened on Thursday with longer tenors quite bid as bonds went up 1.75pts. The rest of the space opens with a tilt towards weakness after trading in the red on Thursday; €-denominated risk remained quite heavy.