Mixed session on Wall Street while labor market data on focus

Moderate decline observed on the Wall Street at the beginning of the month after the previous confident sessions. Some pessimism was also due to weak data on the ISM PMI index in November, which dropped to 49 points after 50.2 in October. The Dow Jones dropped 0.56% to 34,396.53 points, pulled lower by Salesforce, the S&P 500 declined 0.08% to end the session at 4,076.79 points, while the Nasdaq gained 0.13% to 11,482.45 points.

Published statistics show that in October PCE was 0.34% mm / 6.02% yy, while the core index was 0.22% mm / 4.98% yy. The figures came out slightly better than the forecast, which assumed 0.3% mm and 5.0% for Core PCE, but, nevertheless, according to the latest forecast of the regulator, Core PCE Inflation estimates for 2022 are up to 4.5%, for 2023 – 3.1%, which is definitely lower at the moment current indicators. Today, the key event is a report on the labor market in the US, which is predicted to create about 200K new jobs. ADP data released in the middle of the week showed that they were created only 127K vs 239K in October, with a forecast of 200K.

The EU is getting closer to finalizing the deal to cap the price of Russian Crude Oil at $60 per barrel with a Monday set as a deadline for the agreement to be achieved. Poland keeps pushing to harden the sanctions package before signing on the price cap and talks will continue this Friday. Meanwhile, over the past day, Ukrainian forced repelled Russian attacks near several settlements in Donetsk and Luhansk regions and shot down Russian military drones. Up to 13,000 Ukrainian troops have been killed since the war with Russian began in February, a top Ukrainian official claimed. Russian equity market slid this Friday, heading for a weekly decline, as the EU got closer to agreeing a price cap on Russian oil. IMOEX was down 0.45% this morning to 2,178 and RTSI was down 1.29% to 1,109. Energy giants Gazprom, Lukoil and Novatek were among the biggest contributors to the decline along with Sberbank and Norilsk Nickel. A gold producer Polyus was an outsider and gained 1.32%. Russian rouble retreated versus US Dollar, Euro and Yuan extending the weekly drop. USDRUB was up 0.31% to 61.80 and EURRUB was up 0.63% to 65.11. Russian bond yields were higher with 10-year benchmark rouble bonds up 3 bps to 10.15%. In other news, being hit by sanctions on multiple fronts Russian economy could suffer the deepest recessions since 2009, some analysts suggest. Russia’s GDP is expected to shrink by another 3% in 2023.

European markets open weaker to end a week that has been a boon for risky assets. The Stoxx 600 was down 0.41% at 0810 GMT having notched gains of 0.89% on Thursday. Bunds open steady with the 10Y having rallied 12bps on Thursday. Light on the data front today with EU PPI the only major release later in the session for the euro area.

A largely muted open to SSA ahead of US NFP data – one of the major data releases before December’s FOMC. GHANA (+.125) the only firm mover at the open as market continues to buy up ahead of restructuring. The curve was joint outperformer with KENINT on Thursday, moving .875pts higher with duration on the latter getting most of the bid; KENINT opens flat however.

The FGN bonds secondary market closed on a positive note as average yields closed lower by 10bps across the curve. Average yields on the short, medium & long tiers dropped by 22bps, 11bps and 5bps. The Mar 2024 bond was the best performer.

The NTB secondary market closed on a flat note as yields across the short & medium tier of the curve remained unchanged. There was a marginal decline at the long end as yields dropped by 1bps.

In the OMO secondary market, yields remained unchanged across the curve as market remained quiet.