US equities traded lower on Thursday as the markets continued to speculate as to how long Fed would keep its monetary policy tight. Dow Jones lost 1% to 32,930, the S&P fell 1.2% to 3,808 and the Nasdaq went down 1.5% to 10,305. Jobs data pointed to a tight labor market, as the ADP came higher than expected showing private sector payrolls rising by 235k jobs in December. Treasury yields were mixed with 2-year note rising 9 bps to 4.46%, while the yield on the 30-year bond rate lost 4 bps to 3.78%. 10-year note was unchanged at 3.71%. The Dollar was higher with DXY gaining 0.32% to 105.183. All eyes today are on the December jobs report this Friday, that is expected to show the economy created 200k jobs last month and the unemployment rate remained steady at 3.7%. The Fed has said that it does not expect to cut rates this year, but the market is dubious about this view. Investors are now pricing in a peak Fed funds rate of 5.06% for 2023.
Russian troops will hold fire for 36 hours from noon Moscow time today for the holidays of the Orthodox Christmas, as ordered by the Russian President Putin. Ukrainian President Zelenskiy and US President Biden dismissed the move as a ploy designed to give Russian troops a chance to regroup. Ahead of the planned cease-fire, Russian military continued limited counterattacks to regain lost positions along the Svatove-Kreminna line. Ukrainian army reportedly conducted a successful counterattack as Russian forces continued offensive operation around Bakhmut and west of Donetsk City. Russia’s equity market fluctuated on Friday as oil and natural gas prices recovered and investors weighed the Russian government plans to wrest more money from companies to help fund the war in Ukraine. IMOEX was flat at 2,157 and RTSI was up 0.67% at 947. Gas company Novatek and metals producer Norilsk Nickel were among the worst performers on Friday, while Internet company Yandex gained slightly. Russian rouble continued strengthening heading for 3.1% gain against US Dollar this week as the oil prices have recovered. USDRUB was down 0.45% to 71.74 and EURRUB was down 0.82% to 75.41 this morning. Russian bond yields gained slightly with 10-year benchmark rouble bonds yields up 2.5 bps at 10.285%. In other news, the inflation rates in Kazakhstan topped 20% in December year-on-year, which is considered mainly caused by Russia’s was in Ukraine. The last time inflation exceeded 20% in Kazakhstan was in 1996.
European stock markets have been trading in a subdued fashion this Friday morning after mixed German economic data, as investors await key Eurozone inflation ahead of the release of the widely watched U.S. monthly jobs report. The DAX futures contract traded 0.2% lower, CAC 40 traded flat, while the FTSE 100 climbed 0.2%. The main European stock indices received a boost earlier this week from a bigger-than-expected drop in the speed of German consumer price rises, raising hopes that the European Central Bank could rein in its aggressive interest rate hikes reasonably quickly. This brings the release of Eurozone inflation data later in the session firmly into focus. The December CPI figure is expected to come in at 9.7% on an annual basis, only a small reduction from the 10.1% growth the prior month, but there is a degree of confidence within the markets that there could be a positive surprise with a bigger drop. Additionally, gold futures rose 0.1% to $1,842.05/oz, while EUR/USD traded 0.1% lower at 1.0518.
The NTB secondary market closed on a positive note with average yields dropping by 40bps across the curve. The average yields on the short & medium ends remained unchanged while on the long tenors’ average yields dropped by 125bps. Nov 9, 2023 bill witnessed significant buying interest. In the OMO secondary market, average yields closed flat across the curve with the short, medium & long ends remaining unchanged. The FGN bonds secondary market closed on a positive note with average yields across the curve dropping by 2bps. Average yields on the short & medium tenors dropped by 1bps & 5bps respectively while the long end remained unchanged. The Jan 2026 bond was the best performer.