Another weak session on Wall Street with focus on real estate market data

U.S. stocks fall for the second day in a row after the Christmas holidays, weak real estate data increase recession risks. The Dow Jones Industrial Average dropped 150 points or 0.5% to 33093. S&P 500 traded 0.64% lower to 3805, while the Nasdaq Composite sold off 0.8%, coming off a more than 1% loss to start the week. The small cap Russell 2000 index dropped 0.75% in morning trading. Wednesday’s economic data was mixed, as pending home sales dropped 4% for November, worse than expected, while manufacturing data from the Richmond Federal Reserve suggested improving conditions, and came in better than expected.

Overnight Russia had fired cruise missiles from ships and strategic bombers across Ukraine, including Kharkiv in the east, Odesa in the south and Sumy in the north. Russian Foreign Minister Lavrov meanwhile ruled out talks with Ukraine to end the war. Ukraine should cede sovereignty over territories annexed by Russia since February, Lavrov said earlier this week. Russian stock market fluctuated on Thursday following a new round of Russian drone attacks in Ukraine and oil prices drop on concerns of Covid surge in China, that could spread around the world. IMOEX is currently slightly up with a gain of 0.28% at 2,145 and RTSI is up 0.77% at 941. Oil and gas company Surgutneftegas was among the gainers, rising 1% to its highest since November 2. Telecommunications company Mobile Telesystems slid. The value of Russian currency tumbled sharply against US Dollar on Wednesday, on signs of the latest wave of Western sanctions starting to impact Russian economy. Russian finance minister Siluanov said on Tuesday, that an oil price cap imposed by G7, EU and Australia, was squeezing Russia’s export income. Russian rouble was slightly higher today with USDRUB down 0.72% at 71.47 and EURRUB down 0.58% to 75.82. Russian Central Bank is likely to drop US Dollar and buy Chinese Yuan instead in a bid to reduce reliance on the Western finances with yuan/ rouble trading on MICEX increasing around 40% this year. Russian bond yields were a little lower today with 10-year benchmark rouble bonds down 3.5 bps to 10.315%. In other news, Russian wages have been on the rise increasing 0.4% in October on an annual basis with labor shortages partly to blame due to military mobilization. The Bank of Russia might signal a readiness to hike rates in March if inflation follows wage growth higher.

Benchmark bunds closed just 2bps lower on Wednesday at 2.502% with little in major data releases into the year end. The Stoxx 600 likewise shed 0.13% in a similarly muted session where the index traded within 0.5% either side of Tuesday’s close. Markets open relatively muted with the 10Y bunds unchanged while the Stoxx 600 was 0.51% down at 08:15 GMT.

A muted open to SSA in the penultimate session of 2022. The space struggled to hold onto early gains with bonds succumbing to wider negative sentiment and thin liquidity. GHANA (+.125) just holding onto gains with liquidity even more scarce on the curve as the market waits the government’s restructuring proposal. Away from the dour year end news, Cameroon posted an equivalent USD324 million fiscal surplus for the 11 months to November according to state TV.

The NTB secondary market closed on a mildly positive note as average yields dropping by 6bps across the curve. Average yields across the medium & long ends dropped by 45bps & 1bps respectively. The Apr 27, 2023 bill witnessed heavy buying interest while the Mar 9, 2023 bill witnessed some selling pressure. In the OMO secondary market, average yields closed flat across the curve with yields remaining unchanged.

The FGN bonds secondary market closed on a positive note with average yields across the curve, closing lower by 4bps. Average yields on the short & long ends dropped by 2bps and 6bps respectively while the medium end closed flat. The Mar 2026 bond was the best performer while the Apr 2037 bond was the worst performer.