U.S. and european stocks higher. CPI in focus after powell fails to provide lead

US stocks finished higher on Tuesday in a choppy trading session. Concerns over higher interest rates were in focus with inflation data to be released later this week. Dow Jones rose 0.6% to 33,704, the S&P 500 gained 0.7% to 3,919 and the Nasdaq increased 1% to 10,743. The economic calendar was relatively quiet with a small business optimism showing a decline, while wholesale inventories rising in line with expectations. Treasury yields rose with a yield on 2-year note gaining 5 bps to 4.25%, while the yields on the 10-year and 30-year bonds increased to 3.62% and 3.75% respectively. US Dollar was higher with DXY up 0.16% to 103.14. In his first public appearance of the year, Fed Chair Jerome Powell refrained from commenting on rate policy. He noted that Fed’s independence is essential for it to battle inflation. It is now widely expected that the Fed would hike rates by 25 bps in February. No major data releases are scheduled today with all eyes on CPI this Thursday, which is expected to show some moderation in year-on-year prices in December.

Russian military continues attacking utilities infrastructure in Ukraine, hotspots are Donetsk and Kherson areas. According to Reuters, G7 countries will seek to set to price caps on Russian refined products in February: one for products trading at premium to crude oil, another – for products traded at a discount. Russia’s equity market on Tuesday has shown correction after Monday rally, with IMOEX and RTSI slightly down 0.18% to 2159.51 and 0.34% to 974.51, correspondingly, followed by ruble weakened at 0.2%. Today’s opening declares continuing increase prices: +0.51% for IMOEX and +0.81% RTSI, combined with Russian ruble rate strengthened 0.17%. Russian bond yields remained almost unchanged, with RGBITR (gov bonds) and RUCBITR (corp bonds) indexes shown downward dynamic at 0.09% and 0.01%, correspondingly.

Benchmark DE10YT yield closed 3bps lower on Tuesday at 2.278% and continue to go down this morning to 2.23% level, as investors are expecting strong quarterly earnings season in Eurozone. Risk-off sentiments also observed on EU stock markets. The DAX futures in Germany traded 0.65% higher at 14,932 level on Wednesday morning session, the FTSE 100 futures contract in the U.K. added 0.61% at 7,725 points, while the CAC 40 futures in France rose 0.66% to 6,917.5 level.

SSA opens largely tilted to the upside as market bets that Thursday’s CPI print will show further softening. The space closed lower on Tuesday with ANGOL’s -.875 slide the standout underperformer; ANGOL (+.375) leading the uptick at the open. GHANA (-.125) struggling to break free of the negative sentiment with another red open.

The NTB secondary market closed on a positive note with average yields dropping by 5bps across the curve. The average yields on the medium tier dropped by 15bps while the short & long ends closed flat. The Apr 27, 2023 bill witnessed some 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 negative note with average yields across the curve rising by 10bps. Average yields on the short end dropped by 1bps however, the medium & long tenors rose by 10bps & 15bps respectively. The Mar 2024 bond was the best performer while the Jan 2026 & Mar 2050 were the worst performers.