Dollar slips lower, Fed interest rate path, china’s reopening in focus

US equities rose sharply higher on Friday, as investors digested a robust December non-farm payroll report and the ISM Services Index that unexpectedly tumbled into contraction territory. Dow Jones rose 2.1% to 33,631, the S&P climbed 2.3% to 3,895 and Nasdaq rose 2.6% to 10,569. US Dollar surprisingly slipped with DXY falling this morning 0.4% to 103.267. Treasury rates were lower following the data, as the yield on the 2-year note fell 17 bps to 4.27% and the yield on 10-year note lost 17 bps to 3.56%. While jobs growth remained robust and the unemployment rate fell, wage increases continued to slow, report showed on Friday. The report came in the wake of other employment data and the Fed’s meeting minutes last week that appeared to solidify expectations of the Fed remaining aggressive in its rate hike campaign.

Despite the plans of temporary holding fire for the holidays of the Orthodox Christmas, mutual attacks continued from both sides of the conflict. Russian Ministry of Defence announced the ‘revenge’ to Ukrainian attacks in Makiivka, by attacking Ukrainian temporary dislocation in Kramatorsk, with hundreds of troops liquidated. Russia’s equity market was flat: IMOEX remained flat at 2,157 and RTSI was up 0.2% at 947. Monday market opening came with a rise of 2.12% in RTSI index, with SBER and YNDX among the biggest influencers on total rally. Russian ruble has strengthened for more than 3% against US Dollar this morning to 69.84. Russian bond yields remained flat, with RGBITR (gov bonds) and RUCBITR (corp bonds) indexes slightly decreased (-0.01%) and 10-year benchmark ruble bonds yields at 10.3%.

European stock market edged higher Monday, with sentiment boosted by China’s decision to fully reopen its borders as well as stronger-than-expected German industrial production. The DAX futures contract was trading 0.3% higher, CAC 40 futures gained 0.20%, while the FTSE 100 futures contract climbed 0.2%. European markets were boosted by the weekend’s news that China dropped its pandemic border controls, opening its perimeter that had been all but shut since the start of the COVID-19 pandemic. This is likely to result in a boost to the country’s economic activity, which would have a wider impact given China’s importance as a regional growth driver and as a key market for European exporters. Oil prices rose Friday, helped by the news of the reopening of China’s borders, boosting the outlook for fuel demand growth in the world’s largest crude importer. The focus today is on Eurozone unemployment rate for November that is due later in the session. Gold futures rose 0.6% to $1,880.45/oz, while EUR/USD traded 0.5% higher at 1.0696.

The NTB secondary market closed on a positive note with average yields dropping by 3bps across the curve. The average yields on the short end dropped by 55bps while the medium & long ends closed flat. Mar 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 end dropped by 35bps & medium tenors remained unchanged while the long end rose by 5bps. The Mar 2025 bond was the best performer while the Mar 2050 was the worst performer.

SSA continues firm at the open, picking up form where it left Friday. The space turned late in the session as rates rallied post the release of negatively inclined economic data; US NFP data showed a cooling in wage pressures even as hiring remained strong while ISM Services unexpectedly slumped into contraction. Oilers led the reversal with NGERIA (+.75) and ANGOL (+.75) most bid. GHANA (+.25) also firmed with belly tenors being most bid.