CPI data gave new impulse to the markets, Fed meeting on eye

Positive reaction of the markets to the decline in consumer inflation price in the US – on Wall Street good dynamics in the high-tech Nasdaq. The Dow Jones Industrial Average gained 0.3% to 34,108.64, the S&P 500 added 0.73% to 4,019.65 while the Nasdaq Composite rose at 1.01%, to 11,256.81. Sovereign benchmark yields also dropped significantly, US 10Y dropped 3% to 3.5012 level.  At the moment, key rate swaps show that now its peak value is at the level of 4.88%, which can be reached in May 2023. Regarding today’s meeting of the regulator, the forecast is +50 bp (4.25-4.5%).

Bunds continue their reversal in early trading with the 10Y trading 1.939 at 0810 GMT, some 9bps up from Tuesday’s session low. Stocks likewise reversing yesterday’s gains with the Stoxx 600 down 0.35% at 0810 GMT having gained 1.28% on Tuesday. On the data front, Spanish CPI showing the continuing trend of easing CPI figures in the euro area; annual CPI slowed to 6.8% in November from 7.3% in October while the German figure slowed to 10.0% from October’s 10.4%. EU-wide industrial production figures for October will be released later today.

SSA opens tilted towards weakness following Tuesday’s late surge as US CPI undershot expectations reinforcing bets of a slower pace of hiking by the Fed at its FOMC late in today’s session. Bonds rallied into the close as benchmark 10Y USTs shed some 20bps with oilers rallying at least a point as Brent also recovered to close above 80. GHANA (+2.875) the clear outperformer as the country reached a staff-level agreement with the IMF for a $3 billion programme; short end was most bid.

The NTB secondary market closed on a positive note as average yields dropped by 20bps across the curve. Average yields across the short & long tiers dropped by 28bps & 34bps respectively while yields on the medium tier. There was buying interest in Sept 7, 2023 bill.

In the OMO secondary market, average yields closed flat across the curve.

The FGN bonds secondary market closed on a positive note with average yields across the curve, closing lower by 38bps. Average yields on the short, medium & long ends dropped by 140bps, 22bps & 18bps respectively. The Mar 2025 bond was the best performer.