Dollar stabilizes, Dow futures little changed ahead of US holiday

US stocks finished higher on Friday and were up on the week, as markets reacted to a host of results from the banking sector that kicked off Q4 earnings season. Dow Jones rose 0.3% to 34,303, the S&P increased 0.4% to 3,999 and Nasdaq advanced 0.7% to 11,079. Bank of America, Wells Fargo and JP Morgan all exceeded the estimates, while Citigroup fell short of forecasts. The economic news was mixed, as import prices surprisingly increased, following tamer consumer prices, while consumer sentiment rose far more than expected. US Dollar stabilized in early European trading, trading just above a seven-month low on rising expectations that the Fed will slow the pace of its interest-rated hikes with DXY up 0.24% at 102.915. Treasury yields were higher, as the yield on the 2-year note rose 7 bps to 4.21%, the yield on the 10-year note increased 5 bps to 3.5% and the 30-year bond gained 3 bps to 3.61%. US market is closed today for Martin Luther King holiday. The main US economic release this week will be Wednesday’s US retail sales. US Retail Sales posted their largest decline in 11 months in November and a similar drop in December would add to expectations that the Fed will cool its aggressive rate hikes.

Military actions continue in Donetsk, Herson and Zaporozhe areas, with Russian forces attacking utility infrastructure of mentioned areas and Ukrainian forces response in Belgorod area. Russia’s equity market on Friday showed mixed dynamics: IMOEX gained 0.64% to 2199.94 while RTSI was down 0.55% to 1010.4, followed by ruble weakened more than 2%. Today Russian market started to increase again, with RTSI index showing maximum since the middle of December 2022. Russian bond yields remained flat for the whole week, and Friday has not been an exception, with RGBITR (gov bonds) and RUCBITR (corp bonds) indexes shown slightly upward dynamic at 0.08% and 0.01%, correspondingly. 10Y benchmark’s yield is 10.12% (OFZ 26221).

EU stock markets open higher on Monday with released positive GDP and wholesale prices data in Germany. According to the Federal Statistical Office, Germany’s GDP grew by 1.9% in 2022 (2.6% in 2021). The economy has fully overcome the covid-failure of 2020. In nominal terms, GDP reached 3,858 billion euros. German wholesale prices fell 1.6% on the month in December, while the year the wholesale prices rose by 12.8%, compared with a November reading of 14.9%. On the stock markets the DAX index in Germany added this morning 0.2% points to 15,110 level, the FTSE 100 in the U.K. rose 0.15% to 7,850 points while the CAC 40 in France trading flat at 7,022 level.

SSA opens flat to firmer in today’s contracted session with the US out. NGERIA (+1.125) outperformed yet again on Friday as rising Brent and positive risk sentiment pushed oilers in the space yet higher. GHANA (+.375) was buoyed by the positive sentiment with the market largely ignoring the 30% increase to public sector wage bill by the government. ZAMBIN (+.125) saunters higher at the open as the IMF boss heads into the country later in the month in a bid to speed up the debt restructuring.

The NTB secondary market closed on a negative note with average yields rising by 60bps across the curve. The average yields on the long end rose by 200bps while on the medium tenors, average yields dropped by 30bps. However, the short end of the curve closed flat. Oct 26, 2023 bill witnessed significant selling interest while the May 11, 2023 bill saw 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 positive note with average yields across the curve dropping by 2bps. Average yields on the short rose by 5bps  while the medium and long tenors dropped by 1bps. The Jan 2042 bond was the best performer while the Apr 2037 bond was the worst performer.