Rather confident dynamics of Wall Street indices on the eve of the publication inflation data in the US today, the market is waiting for 7.3%, and in case of figures below this level, it will be a definite positive for the market. The New York Fed’s monthly survey showed that inflation expectations, both one-year and three-year, resumed their decline, the latter are now near “pre-Covid” levels. A year ahead, Americans expect inflation at 5.23% (lowest since August 2021) vs. 5.94% and 5.44% two months earlier, three years ahead – 3.0% vs. 3.11% and 2.91%.
The Dow Jones rose 528.58 points, or 1.58%, to 34,005.04, the S&P 500 gained 56.18 points, or 1.43%, to 3,990.56 and the Nasdaq added 139.12 points, or 1.26%, to 11,143.74.
The EU countries reached a preliminary agreement to clear the way for Ukraine to receive an 18-billion-euro aid from the bloc after Hungary dropped its opposition in exchange for a reduction in penalties over graft concerns. Meanwhile, Ukrainian President Zelenskiy warned on Monday night that a respite in Russian aerial assaults was likely an indication that Russia was preparing a fresh wave of attacks. Russian stock market was steady on Tuesday morning as investors weighed this week’s recovery in oil prices against the economic risks related to international sanctions and the war in Ukraine. IMOEX was little changed at 2,273 and RTSI lost around 0.46% to 1, 084. IMOEX lost 43% year-to-date, heading for its worst year since 2008. Food retailer Magnit and steelmaker Severstal were among the best performers on Tuesday. Russian rouble weakened for a second day against US Dollar and Euro poised to end the session at the lowest level since mid-October. USDRUB was up 0.42% at 63.22 and EURRUB was up 0.36% at 66.73. Western sanctions continued putting pressure on Russia’s currency, as well as increased import activities with India and China, that have been easing conditions to enable more deliveries to Russia. Russian bond yields were slightly lower today with a 10-year benchmark rouble bonds yields down 5 bps at 10.11%. In other news, Russia’s budget surplus quadrupled in November despite the financial drain of the war in Ukraine, recording another month of improvement thanks to dividends and a windfall tax paid by Gazprom PJSC.
EU markets open higher on Tuesday as investors waiting release of US inflation data later today. The DAX index in Germany traded 0.63% higher at 14,397.35 level, the FTSE 100 in the U.K. climbed 0.17% to 7,459.27 points, while CAC 40 in France traded 0.54% higher at 6,685.13. Light on the data front today with US CPI due tomorrow kicking off a raft of CPI figures in the lead up to Thursday’s ECB monetary policy meeting.
SSA opens largely muted ahead of US CPI data later in the session. GHANA (+.25) continues firm at the open ahead of the joint presser by the BoG, FinMin and IMF; the bonds caught a bid late in the session on Monday to close .25pts higher – the best in the session in SSA. A flurry of important data and policy decisions this week – US CPI today, Fed’s FOMC tomorrow and BoE and ECB’s own MPC’s on Thursday – appears to have stifled activity on Monday with bonds closing +/-.25pts.
The NTB secondary market closed on a positive note as average yields dropped by 1bps across the curve. Average yields across the short & medium tiers remained unchanged while the long end dropped by 1bps. There was mild buying interest at the long end. In the OMO secondary market, average yields closed closed lower by 1bps across the curve.
The FGN bonds secondary market was quiet with average yields across the curve, closing flat. Average yields on the short end dropped by 1bps while medium & long ends of the curve remained unchanged. The Mar 2024 bond was the best performer.
There was bond primary auction with three tenors offered- the DMO sold; N45.45b, N40.42b & N178.65b at 14.60%, 14.75% & 15.80% respectively.