US and EU markets under pressure on fears of recession

US equities market finished lower on Thursday, as solid labour market data created investors’ concerns about more aggressive strategy by Fed in terms of rate hikes that could result in recession. Dow Jones and the S&P were down 0.76% to 33,044 and 3,898, while the Nasdaq declined 1.0% to 10,852. Manufacturing and housing data also did not encourage investors, providing more fears to potential upcoming recession. Treasury rates were a bit higher, as the yield on the 2-year note increased 4 bps to 4.13%, the yield on the 10-year note showed minimal change with +1 bps to 3.39% and the 30-year bond rate increased 2 bps to 3.56%. The Dollar slipped with DXY losing 0.15% to 101.95. Focus today is FOMS member and Fed member speeches, as well as Baker Hughes Oil Rig Count new data.

Military actions continue in Donetsk and Lugansk areas. Eu parliament has voted for special tribunal for Vladimir Putin and other participants of Russian political and military leadership. The US Pentagon announced new $2.5bln package of military help to Ukraine. Russia’s equity market on Thursday decreased: IMOEX ended up down -1.25% at 2168 and RTSI traded 1.32% lower at 993, followed by ruble remained almost flat. Today trading session stated continue in equity prices drop: more than 0.2% decrease in both indices. Investor’s interests shifted from equity to bonds, with RGBITR (gov bonds) shown upward dynamic at 0.11%, mostly driven by low duration bonds, while RUCBITR (corp bonds) index was up at 0.16%.

European investor concerns are also with slower economic growth, with reflect in market prices. ECB President Christine Lagarde warned about inflation figures remain ‘too high’, which will lead to continuous aggressive monetary policy. On the stock markets during yesterday’s session the DAX index in Germany traded down 1.72% to 14,920 level, the FTSE 100 in the U.K. fell 1.07% to 7,747 points, and the CAC 40 in France declined 1.86% to 6,951 level. Today’s opening on European stock market showed some cautious positive tone correction: DAX and FTSE 100 trade higher 0.5%, while CAC 40 is up 0.2% from previous closing prices.

No dramatic changes on FI, with 10Y UK GILT yield was down 4 bps to 3.275, recovering today back to 3.31, while Deutsche Bundus yield gained 4 bps to 2.06.

Market opens mixed as investors weighed comments by US and European Bankers favouring higher interest rates. Oil headed for second weekly as Brent rises to $86.63 buoyed by optimism over stronger Chinese demand. NGERIA (FLAT) Sovereigns traded flat while increased demand was seen in the Corps. KENYA (+0.50) joins on as government says it intends to boost income by targeting tax collection and curbing borrowing.

The NTB secondary market closed on a positive note with average yields dropping by 10bps. Average yields across the long end of the curve dropped by 20bps however, average yields across the short & medium end of the curve closed flat. Dec 7, 2023 saw some buying interest. In the OMO secondary market, average yields closed flat with average yields across the short, medium & longs ends remaining unchanged.

The FGN bonds secondary market closed on a negative note with average yields across the curve rising by 45bps. Average yields on the medium & long ends rose by 35bps & 65bps respectively while the short end dropped by 2bps. The Mar 2025 bond was the best performer while the Mar 2036 bond was the worst performer.