European chares higher ahead, US dollar lower on slower Fed hikes

US equities finished higher on Friday and mixed for the last week, with the Dow and S&P posting their first weekly declines since the start of the new year. Dow Jones rose 1% on Friday to 33,375, the S&P 500 climbed 1.9% to 3,973 and the Nasdaq soared 2.7% to 11,140. Netflix fell well short of expectations, but beat forecast for subscribers, while Alphabet announced a 12,000 reduction in the work force. Treasury yields were higher with 2-year note up 7 bps to 4.19%, while the yield on the 10-year note rose 8 bps to 3.48% and the 30-year bond rate advanced 9 bps to 3.65%. The Dollar started this week testing a fresh nine-month low, as investors preparing for the Fed meeting on February the 1st trimming their rate hike expectations. DXY lost 0.31% to 101.465. Economic news was light on Friday with existing home sales showing an eleventh straight month-over-month decline. A spate of weak economic data last week, with notable declines in retail sales and industrial production, gave an impression of US economy slowing down sharply at the year end, despite of the strong labour market. The focus this week will be on a first estimate of the fourth quarter GDP data on Thursday with 2.6% projected expansion.

Military actions continue in Donetsk and Lugansk areas, hotspots are Bakhmut and Kramatorsk. Finland has frozen Russian assets at almost 200 mln eur, including cars, yachts, planes and stocks. According to Reuters, 10th package of EU sanctions should be ready around the anniversary of Russian invasion, on Feb 24th. Russia’s equity market on Friday slightly decreased: IMOEX ended up down -0.12% at 2166 and RTSI traded 0.10% lower at 991, followed by ruble remained almost flat. This week’s opening has shown some positive: +0.5% in IMOEX and +0.77% in RTSI, which is close back to 1000 level. As for bonds, with RGBITR (gov bonds) and RUCBITR (corp bonds) shown downward dynamic at 0.04% and 0.06%, correspondingly, ending up flat WoW.

European stock markets open higher this week due to investors focusing on ECB meeting at the beginning of February. In recent comments ECB officials noted that monetary policy in Eurozone should remain aggressive, despite optimism that inflation may have peaked. On the stock markets the DAX index in Germany traded flat at 15,036 level, the FTSE 100 in the U.K. added 0.12% to 7,777 points, while the CAC 40 in France rose 0.11% at 7,994 level.

A muted open to SSA following Friday’s weak performance. The space had traded largely weaker as rates moved higher with 10Y UST yields up some 8bps. KENINT (+.375) also continued its firm run while GHANA (+.50) also joined in even as banks and other stakeholders continue to push back against the local debt swap proposal. GHANA (+.25) continues firm at the open amid reports that the government is now proposing a 5% coupon for local debt restructuring in 2023 having originally proposed a moratorium.

The NTB secondary market closed on a flat note with average yields across the long end of the curve closing flat. Average yields across the short, medium & long ends of the curve closed remained unchanged. In the OMO secondary market, average yields closed flat with average yields across the short, medium & longs ends remaining unchanged as well.

The FGN bonds secondary market closed on a negative note with average yields across the curve rising by 3bps. Average yields on the long ends rose by 5bps, the short end dropped by 1bps while the medium end remained unchanged. The Mar 2024 bond was the best performer while the Apr 2049 bond was the worst performer.