US equities finished lower on Monday trimming a strong start of the 2023. The Dow Jones lost 0.8% to 33,717, the S&P fell 1.3% to 4,018 and the Nasdaq tumbled 2% to 11,394. The economic calendar was quiet on Monday with all eyes on this week’s Central Banks meetings. The Fed is expected to raise rates by only 25 bps later this week, while the ECB and Bank of England are anticipated to increase their benchmark rates by 50 bps. The only notable report yesterday was the Dallas Fed Manufacturing Index, which has improved, but remained in contraction territory. Treasury yields were higher, as the yield on 2-year note was up 5bps to 4.26%, while the yields on the 10-year and the 30-year bonds both increased by 2 bps to 3.54% and 3.65% respectively. US Dollar ticked higher with DXY rising 0.2% to 102.293. Data wise, the Q4 Employment Cost Index is due today, which is expected to increase 1.1%, and CB Consumer Confidence Index, which is forecasted to rise to 109 from December’s 108.3. Chicago PMI for January should remain at the previous month’s 45.1 figure.
Military actions continue in Ukraine, with Herson and Lugansk as main hotspots. Russia and Belarus started joint military training on Belarus territory. Meanwhile the US agreed to transfer to Ukraine 60 their IFV Bradley and France intends to agree to transfer its military aircrafts. IMF improved its forecast, considering Russia in 2023 will register growth 0.3% (vs contaction 2.2%). Russia’s equity market on Monday was showed mixed dynamic: IMOEX ended up +0.69% at 2204 and RTSI traded 0.5% lower at 987, followed by ruble weakened by 1.7% vs USD. Monday opening has shown continuing trend: +0.46% in IMOEX and +0.08% RTSI. As for bonds, with RGBITR (gov bonds) and RUCBITR (corp bonds) shown slight upward dynamic at 0.08% and 0.04%, correspondingly, mainly by short and mid duration bonds, with 10Y benchmark yield rising at 10.32%.
European markets, after closing flat yesterday, opened again in red zone, following sentiment around Fed interest rate potential hike, as well as EU growth data. On the stock markets, the DAX index in Germany traded 0.61% lower this morning at 15,150 level, the FTSE 100 in the U.K. lost 0.63% to 7,735 points, while the CAC 40 in France is down 0.51% at 7,046 level. 10Y GILT and 10Y Deutsche Bundus yields got higher by 1bps and 5bps, correspondingly. Focus of investors is mainly still on the second half of week, where ECB policy decisions and key economic data, especially EU inflation are scheduled to be disclosed.
The NTB secondary market closed on a negative note with average yields increasing by 7bps across the curve. Average yields across the medium end rose by 32bps while average yields across the short& long ends of the curve, remained unchanged. Jun 8, 2023 saw some selling pressure.
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 negative note with average yields across the curve rising by 1bps. Average yields on the short & medium ends rose by 10pbs & 2bps respectively. Average yields at the long end of the curve dropped by 2bps. The Mar 2036 bond was the best performer while the Mar 2024 bond was the worst performer.
Market opens largely weak following a somewhat risk-negative session on Monday. NGERIA (-0.25) was weighed down in yesterday’s sessions amid the news of Moody’s downgrade shedding over 2pts on the day. GHANA (FLAT) surprised investors by raising interest rate less than forecast as it expects to finalize a deal with the IMF by the end of the first quarter. The MPC lifted borrowing costs by 100 basis points to 28%. KENYA (-0.25) also surprised most analyst by keeping its benchmark interest rate unchanged for the first time since July 2022, as it sees inflation declining in the near term.