Markets rally after Fed’s powell acknowledges disinflation started

US equities rallied on Wednesday after Fed announced 25 bps rate hike (as expected) and announced started disinflation. The Dow Jones traded almost flat, rising 0.02% to 34,092, the S&P Index added 1.05% to 4,119 and the Nasdaq was 2% higher at 11,816. Fed chair Jerome Powell, despite showing not hawkish message and announcing easing inflation growth, warned investors about more potential hikes to get the inflation level to target 2%. Job openings unexpectedly rose in December, according to Labor Dept’s report, while manufacturing contracted further in January. Treasury yields were lower with the yield on the 2-year note down 10 bps to 4.11% and the yield on the 10-year note decreasing 10 bps to 3.42%. US Dollar slipped with DXY down 0.55% at 101.21. The main anticipated data for today is again with labor statistics, especially Jobless Claims.

Military actions continue in Ukraine, with Donetsk area, especially Bakhmut and Kramatorsk, as main hotspot. Russia’s equity market on Wednesday continued trading in green zone following rally this week: IMOEX ended up +0.2% at 2230 and RTSI traded 0.12% higher at 1002. Ruble strengthened by 0.06% vs USD to 69.77. Today’s opening shows increase again: +0.4% in both IMOEX and RTSI. As for bonds, RGBITR (gov bonds) and RUCBITR (corp bonds) renewed again its YTD high with 499.86 and 615.71, correspondingly, mainly by short and mid duration bonds, with 10Y benchmark yield at 10.31% level.

European markets rising during today’s trading session, following investors positive reaction to Fed’s non-hawkish comments from Jerome Powell. On the stock markets, the DAX index in Germany traded this morning higher 1.5% at 15,404 level, the FTSE 100 in the U.K. gained 0.6% to 7,807 points, while the CAC 40 in France is up 0.58% at 7,118 level. 10Y GILT and 10Y Deutsche Bundus yields got lower by 10bps and 3bps, correspondingly. Today ECB and Bank of England will make new rate announcements, with investors’ forecast to 50bp increase both. Key Economic data in EU this week also deserves investor’s attention.

The NTB secondary market closed on a positive note with average yields dropping by 10bps across the curve. Average yields across the long end dropped by 15bps while average yields across the short & medium ends of the curve, remained unchanged. Nov 9, 2023 saw some buying interest.

In the OMO secondary market, average yields closed flat with average yields across the curve, remaining unchanged.

The FGN bonds secondary market closed on a positive note with average yields across the curve dropped by 10bps. Average yields on the short, medium & long ends dropped by 3pbs, 20bps & 5bps respectively. The Jan 2026 bond was the best performer.

**Moody’s has downgraded long term deposit, issuer & senior unsecured debt ratings of the nine rated Nigerian banks to Caa1 & B3 and changed the outlook to stable. This followed the downgrade on Jan 27, 2023 of the long term issuer rating of the govt of Nigeria to Caa1 from B

SSA opens firmer as investors digest the latest move by the U.S. Federal Reserve. The Fed raised its benchmark interest rate by a quarter percentage point as expected and gave little indication it is nearing the end of this hiking cycle. Risk appetite strengthened in the build up to the Fed’s rate decision bringing much needed respite to the Sovereigns. NIGERIA (+1.50) and ANGOLA (+.875) were the outperformers with some demand seen at the belly of the curve. GHANA (+.625) joined in on the act albeit on a comparatively muted note.