US equities finished sharply lower following higher than expected inflation data, as well as hawkish commentary from Fed. The Dow Jones lost 1.3% to 33,697, the S&P fell 1.4% to 4,090 and the Nasdaq decreased 1.8% to 11,856. Treasury yields were higher, as the yield on the 2-year note was up 7bps to 4.67%, the yield on the 10-year note rose 5 bps to 3.86% and the 30-year bond rate advanced 7 bps to 3.92%. The US Dollar surged to a six-week high in early European trading with DXY gaining 0.55% to 104.362. Data released on Thursday pointed to a resilient US economy, as the initial jobless claims unexpectedly declined last week, while producer prices accelerated in January, which followed on from retail sales rebounding sharply in January and consumer inflation coming stronger that expected earlier in the week. Today’s economic calendar will include the final inflation release for January, represented by the Import Price Index, which is forecasted to have declined 0.2% m/m, and Leading Economic Index, which is expected to decrease by 0.3% m/m.
Military actions continue in Ukraine, with more than 40 missiles attacks over Ukrainian territory last night. Russian equity market recovered a bit after yesterday slump. IMOEX ended Thursday trading session 0.58% lower at 2,153 level, while the RTSI traded down 0.9% to 906 points. USDRUB exceed 75 points first time since April 2022. Today’s morning showed some correction rebound in both indexes: IMOEX is up 1% to 2,174, while RTSI rises 1.3% up to 918 level. On the bond space RGBITR (gov bonds) and RUCBITR (corp bonds) showed little upside during yesterday trading session and today morning, with combined dynamics of +0.08% to 609.6 and +0.01% to 498.5, correspondingly, mostly in rebounding in 3-5y bonds, with 10y benchmark yield, on the contrary, rising to 10.51%.
European markets are traded in red zone during today’s trading session, following US overnight slump on larger interest hikes worries. On the stock markets, the DAX index in Germany traded this morning lower 0.8% at 15,405 level, while the CAC 40 in France is down 0.8% to 7,311 level, and the FTSE 100 in the U.K. with -0.3% to 7,991 points. 10Y GILT and 10Y Deutsche Bundus yields rose 14bps to 3.56% and 10 bps to 2.53%, correspondingly. Meanwhile, corporate earnings continue to come, with Mercedes Benz better-than-expected income, NatWest Group highest profits since global financial crash and Hermes 22.9% rise of 4Q sales. Next week on Monday investors’ focus will be on EU Economic forecast.
SSA opens weaker following an unexpected overshoot of US PPI (6.0% vs expected 5.4%) cementing odds of a Fed higher-for-longer. The space mostly gave up early gains save GHANA (+.625) and NGERIA (+.25). GHANA (+.25) opens green even as the finance minister hinted that commercial creditors may face sterner restructuring terms than bilateral creditors. NGERIA (-.25) succumbs to the negative sentiment even as the IMF projected a rosier growth outlook for the economy with expected 3.2% in 2023.
The NTB secondary market closed on a negative note with average yields rising by 20bps across the curve. Average yields across the short end of the curve rose by 65bp while at the medium end, average yields declined by 15bps and the at the long end, average yields closed flat. Mar 9, 2023 bill witnessed some selling interest while Jun 8, 2023 bill saw some buying interest.
In the OMO secondary market, average yields closed higher by 90bps. Average yields at the short end of the curve rose by 90bps. The Mar 7, 2023 bill witnessed some selling pressure.
The FGN bonds secondary market closed on a positive note with average yields across the curve dropped by 1bps. Average yields on the short & long ends declined by 17bps & 1bps respectively. The medium end however rose by 5bps on the average. The Mar 2025 bond was the best performer while the Jan 2026 bond was the worst performer.