Weak holiday shopping data put pressure on U.S. markets

Moderate growth noted yesterday on the Wall Street after falling during the last sessions. Investors remain wary of index performance given weak U.S. holiday sales and continued pressure on bond yields. The Dow Jones rose 0.28% to 32,849.74, the S&P 500 added 0.10% to 3,821.62 level while the Nasdaq Composite traded flat at 10,547.11 points. General concerns about further rate hikes continue to have negative impact on market sentiment. Adding pressure was an increase in U.S. Treasury yields after the BOJ made a surprise tweak to its bond yield control that allows long-term interest rates to rise more. Back to treasury prices yield of benchmark 10YUST rising to a three-week high of 3.71%.

US President Joe Biden will unveil nearly $2 billion in assistance and announce moves to deliver a Patriot missile battery to help Ukraine to improve its defenses this winter. Ukrainian President Zelenskiy will travel to Washington today to address US Congress, which will be his first trip outside of Ukraine since the start of Russia’s invasion. In the meantime, Ukrainian forces repelled assaults near 25 settlements, including the eastern city of Bakhmut, while Russian troops launched five missile attacks and 15 airstrikes damaging civilian infrastructure in several cities, including Kherson. Russia’s equity market rebounded after several days of declines as oil and industrial metals prices edged higher. IMOEX was up 0.58% to 2,132, while RTSI was down 1.73% to 951. The shares of Internet company Yandex rose as much as 1.3%, making this company the biggest contributor to gains. Gas producer Novatek and Sberbank were also among the winners. Gazprom and Lukoil traded lower. Russian rouble weakened again this morning with USDRUB up 1.77% to 70.65 and EURRUB up 1.74% to 75.24. The currencies of small neighboring countries of Russia appear to have benefited hugely from Russian people fleeing mobilization with currencies such as Armenian dram rising more than 22% year-to-date. Georgia’s Lari and the Tajik somoni have gained 16% and 10% respectively. Russian bond yields were higher again this morning with 10-year benchmark rouble bonds up 2 bps to 10.36%. In other news, the government of Luxemburg has issued an authorization releasing certain frozen funds and economic resources belonging to the NSD. The authorization was granted to January the 7th.

European markets open higher on Wednesday as investors seen that consumer sentiment in Eurozone and especially in Germany becomes higher. Germany’s consumer sentiment is set to show a small improvement in January, according to the forward-looking index released by the GfK institute earlier Wednesday. On the stock markets the DAX index in Germany traded 0.71% higher at 13,983 level, the FTSE 100 in the U.K. added 0.75% to 7,426 points while the CAC 40 in France climbed 0.98% to 6,514 level. The indexes had firmed 0.27% on Monday after a number of positive data releases – German Ifo Business Index topped expectations at 88.6 for December while euro-area construction output grew 1.27% in October pointing to signs of perhaps a milder recession.

SSA opens tilted towards the upside as risk sentiment turns positive and rates open steady. Bonds closed lower on Tuesday with GHANA (-.50) failing to hold onto the opening positive momentum; short bonds bore the brunt of the selling as bonds on the curve move to trade in a narrower price range. Oilers ANGOL (-1.00) and NGERIA (-1.25) led the slide as Brent whipsawed throughout the session. KENINT (+.125) joins in on the wider reversal in the space today even as the IMF expects foreign reserves to decline further in 2024; bonds had traded .75pts down on Tuesday.

The NTB secondary market closed on a slightly positive note as average yields dropped by 5bps across the curve. Average yields across the short end dropped by 15bps while the medium & long tiers of the curve remained unchanged. The Mar 2023 bill witnessed some buying interest. 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 10bps. Average yields on the short, medium & long ends dropped by 15bps, 15bps & 1bps respectively. The Jan 2026 bond was the best performer while the Apr 2037 was the worst performer.