BRAZIL: Equities Under Pressure As Political Tensions Escalate
Jul-18 16:43
- Local assets have come under pressure today amid the escalation of domestic political tensions, most notably the IBOVESPA, which has fallen by another 1.3%, taking losses this week to 1.75%.
- DI swap rates have also edged higher, with yields up by 13-14bp in the belly (and over 30bp on the week), while USDBRL has extended gains in recent trade (+0.4%).
- These moves have come after a Brazil court authorised police to carry out a search of former President Bolsonaro’s home today and ordered that he wear an ankle monitor amid concerns he was about to flee the country and seek political asylum in the US.
- Speaking a short while ago, Bolsonaro has denied that he was about to leave the country even though he has no doubt he will be convicted over the coup allegations and expects to be jailed by August.
- He added that it seems as if the government wants a confrontation with the US, even though Trump is seeking negotiation. He also denied that he’d ever advise Trump and said that if he’s barred from running in next year’s election, then Lula will win.
- Speaking last night, President Lula reiterated his call for dialogue to negotiate trade issues. However, he also continued to strike a defiant tone, suggesting that he won’t back down in the face of the tariff threat and that this dispute will drag on to the Aug 1 deadline, at the least.
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BONDS: EGBs-GILTS CASH CLOSE: UK Curve Bull Flattens Ahead Of BOE
Jun-18 16:19
Curves bull flattened Wednesday, with Gilts modestly outperforming Bunds ahead of Thursday's BOE decision announcement.
- Early trade saw some bull steepening led by Gilts after UK CPI data looked in line with expectations.
- There was a broad rally across core FI for almost the entire remainder of the session however, with the long end leading gains.
- The main triggers were weak-leaning US data (jobless claims and residential construction), with lower oil prices as US President Trump seemingly views a near-term resolution on the Iran-Israel conflict.
- The German and UK curves both bull steepened on the day. Periphery/semi-core EGB spreads were little changed.
- Overnight focus will be on the US Federal Reserve, but the BOE takes centre-stage Thursday - MNI's preview is here.
- It would be a surprise to markets if the outcome is anything other than an on hold decision with unchanged official guidance. Expectations are relatively strongly pointing towards a 7-2 vote split for a hold/cut respectively.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.6bps at 1.842%, 5-Yr is down 3.8bps at 2.103%, 10-Yr is down 3.8bps at 2.497%, and 30-Yr is down 4.1bps at 2.944%.
- UK: The 2-Yr yield is down 3.5bps at 3.888%, 5-Yr is down 4.7bps at 4.006%, 10-Yr is down 5.5bps at 4.495%, and 30-Yr is down 5.4bps at 5.229%.
- Italian BTP spread down 0.2bps at 95bps / French OAT unchanged at 71.5bps
US STOCKS: Midday Equities Roundup: Off Highs, Reacting to Geopol Headlines
Jun-18 16:12
- Similar to this week's underlying themes, stocks gained as wires reported that Iran had reached out to Pres Trump to discuss a ceasefire with Israel. Support gradually eased after Iran denied the call: Iranian officials posted on social media: "Iran does NOT negotiate under duress, shall NOT accept peace under duress, and certainly NOT with a has-been warmonger clinging to relevance."
- Currently, the DJIA trades up 173.38 points (0.41%) at 42389.47, S&P E-Minis up 25.5 points (0.42%) at 6063.75, Nasdaq up 115 points (0.6%) at 19636.09.
- Leading gainers included Coinbase Global climbing 6.51% after a Stablecoin bill cleared the Senate, Enphase Energy +4.81% and Nucor +3.71%, Jabil +3.83%, Intel +3.61.
- Conversely, insurance and financial services retreated: Allstate Corp -3.47%, Progressive -3.06%, Visa -2.81%, while oil and gas shares retreated as crude scaled back a fraction of Tuesday's rally (WTI -0.74 at 74.10): Halliburton -2.87% and CF Industries Holdings -2.50%
FED: US TSY TO SELL $76.000 BLN 13W BILL JUN 23, SETTLE JUN 26
Jun-18 16:05
- US TSY TO SELL $76.000 BLN 13W BILL JUN 23, SETTLE JUN 26
