European stocks higher ahead of US inflation figures

US equities finished higher on Thursday as Q4 GDP came better than expected, jobless claims unexpectedly fell, new home sales rose, and durable goods orders jumped. Dow Jones climbed 0.6% to 33,949, the S&P went up 1.1% to 4,060 and the Nasdaq rose 1.8% to 11,512. Treasury rates were mostly higher, as the yield on 2-year note rose 4 bps to 4.18% and the yield on the 10-year note was up 3 bps to 3.49%, while the 30-year bond rate was unchanged at 3.63%. US Dollar edged higher earlier today, but is still on course to end the week lower, as the markets consolidated around expectations of smaller interest increases by the Fed. DXY is currently almost flat at 101.618. The release of slightly stronger than expected fourth quarter GDP yesterday changed the picture very little with real consumer spending slowing more than expected and the quarterly index for personal consumption expenditures falling sharply down. Consensus is now firmly in favor of the Fed raising the target range for fed funds by only 25 bps. Focus today is on the December price indices for core personal consumption expenditures, which is forecasted at 0.3%.

Military actions continue in Ukraine, with more than 50 missiles launched all over the country aimed at energy facilities. Meanwhile UK defense intelligence does not confirm success of Russian forces in Ugledar, which was briefly . Russia’s equity market on Thursday slightly decreased: IMOEX ended up down -0.15% at 2166 and RTSI traded 0.12% lower at 985, followed by ruble weakened by 0.3% vs USD. Friday opening has shown some positive: +0.4% in IMOEX and +0.3% in RTSI. As for bonds, with RGBITR (gov bonds) and RUCBITR (corp bonds) shown slight upward dynamic at 0.1% and 0.05%, correspondingly, with 10Y benchmark yield at 10.24%.

European markets, after closing lower yesterday, level out today as investors focusing on upcoming economic data later this week in the US and EU zone. On the stock markets, the DAX index in Germany traded 0.19% higher this morning at 15б160 level, the FTSE 100 in the U.K. gained 0.14% to 7,778 points, while the CAC 40 in France is up 0.17% at 7,108 level. 10Y GILT and 10Y Deutsche Bundus yields got higher by 2bps and 5bps, correspondingly.

A mixed open in SSA as NIGERIA (-0.10) continues to slide sideways following a sluggish run in yesterday’s session while GHANA (FLAT) seems to be muted. ZAMBIA (+0.20) however opens firm as the IMF says it is confident that an agreement to restructure the country’s debt is within reach after engaging with the country’s creditors.

The NTB secondary market closed on a positive note with average yields dropping by 220bps across the curve. Average yields across the short, medium & long ends of the curve dropped by 95bps, 185bps & 330bps respectively. The Oct 26, 2023 bill saw significant buying interest. In the OMO secondary market, average yields closed flat with average yields across the short, medium & longs ends remaining unchanged again.
The FGN bonds secondary market closed on a positive note with average yields across the curve dropping by 10bps. Average yields on the short, medium & long ends dropped by 20bps, 8bps & 7bps respectively. The Apr 2037 bond was the best performer.

**The CBN held the PMA and sold a total of N220.53bn across three tenors. 91days- sold N1.74bn @ 0.29%, 182days- sold N1.26bn @ 1.80% & 364days- sold N217.53bn @ 4.78%. The auction was heavily oversubscribed.