U.S. markets finished Friday’s session higher despite hawkish comments from FED’s official during last week. Investors are weighed stronger inflation data that expected as CPI and PPI slowing in October. During Friday’s trading session, the Dow Jones added 199.4 points or 0.6% to 33,745.7, the S&P 500 gained 18.8 points or 0.5% to 3,965.3 and the NASDAQ Composite finished flat at 11,146.1. For the week, the Dow gained 0.3%, the S&P 500 fell 0.3%, and the NASDAQ lost 0.8%. Fed’s next meeting in December will be on focus ahead of this week while investors will be waiting for the release of the FOMC’s meeting minutes to understand next step in the rate hike. According to the US Ministry of finance, the budget deficit in October, the first month of the fiscal year, was -$88 billion vs. a deficit of -$429.7 billion and -$220 billion two months earlier. The cumulative deficit over the past 12 months is -$1.298 trillion, which, although to a lesser extent than before, continues to indicate a negative budgetary impulse and this is a rather significant disinflationary factor.
Powerful blasts took place in the area of Ukraine’s Zaporizhzhia nuclear power plant over the weekend, including more than a dozen on Sunday morning, the UN’s atomic agency said. Some buildings and systems have been damaged, but not critically so far. In the meantime, Ukrainian army has been advancing “little by little” in the eastern Luhansk region, Ukrainian President Zelenskiy said Sunday night. The most intense fighting has been taking place in the Donetsk region before ebbing due to the deterioration in the weather. Russian stocks declined for a third day in the row to the lowest since November 10, as oil prices sank following the biggest weekly decline since August as China tightened anti-Covid curbs. IMOEX lost 1.71% to 2,168 and RTSI lost 1.9% to 1,125. Energy giants Rosneft, Lukoil and Gazprom were among the biggest contributors to the decline along with Sberbank and Internet company Yandex. The children clothes retailer Detskiy Mir was one of few gainers rising almost 2%. Russian rouble was lower against the US Dollar on Monday morning and higher against Euro and Yuan with USDRUB up 0.29% to 60.70 and EURRUB down 0.38% to 62.05. Some analysts predict a weakening of Russian currency over the next 6-8 months, as imports gain pace, while exports fall due to oil restrictions. Russia’s imports crashed after the start of invasion to Ukraine but have been recovering since and are now expected to end the year only 10% down. Russian bond yields were little changed with 10-year benchmark rouble bonds yields holding just below 10% at 9.995%.
E.U. markets opened lower on Monday as investors expecting more tightening monetary police on this decade with the impact to future economic grow. DAX futures contract in Germany traded 0.57% lower at 14,349 level, the FTSE 100 futures contract in the U.K. decreased at 0.1% to 7,380 points, while CAC 40 futures in France fell 0.18% to 6,631. Meanwhile, German producer prices fell unexpectedly on the month in October, data showed Monday, dropping 4.2% on the month, compared with expectations for a rise of 0.9%. This is a good signal, but still pales alongside the annual reading of Eurozone inflation which soared past 10% at the end of last month, up from 9.9% in September.
SSA opens largely lower to kick off the week as the weakness trend from last week continues. The space was markedly weaker on Friday as Brent fell as low $86/bbl while rates whipsawed before ultimately closing 4.5bps higher. NGERIA (-.75) yet again led the slide while KENINT (-.125) finally succumbed to the wider selling pressures in the space.
The bonds secondary market saw little activity as average yields closed on a positive note. Average yields on the short, medium and the long end bonds closed lower by an average of 3bps, 15bps & 6bps. The Feb 2028s bond was the best performer. The worst performer was the Apr 2037s bond. The NTB secondary market closed on a flat note. Average yields remained unchanged across the short & medium tier of the curve. There was a marginal drop by 1bps at the long end. In the OMO secondary market, yields closed flat across the curve. The MPC is deliberating and the outcome of the meeting will be made known on Tuesday. The DMO has today offered N100 billion SUKUK paper with a rental rate of 15.64% 10-yr bond.