In the Know

In the Know

By 25 May, 2022 No Comments
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25 May 2022

Brief
Risk-off sentiment takes bond prices up and equities down. A flurry of bad economic data, as low PMI´s, big banks cutting China growth estimates and a growth warning from a growth stock, weigh in investors morale.

Agenda
 
Wed:     ECB Lagarde speaks, US Goods Orders.
Thurs:   US GDP.
Fri:          EU M3, US Michigan Consumer Sentiment.

Bonds
Germany PMI beat estimates, but not eh UK´s which reported a 51.8 vs 57 estimated. US´s came in just above forecast.
ECB
´s council member Kazaks thinks that a 0.25% hike would be enough at July´s meeting, as opposed to the 0.50% forecasted by traders. The Bund yield remains steady around 1%, with investors taken between the general bullish bond prices and the conviction of higher rates in Euroland before Sept.
Atlanta FED´s president urges caution in the wat to take monetary policy to a neutral stance.
UST yield
down to 2.77% while the price continue recovering.

Emergins
Indonesia raised USD 3.25 billion via a 2 trancher at 5 and 10 year at 4.4% and 4.7%.
Sri Lanka sought a USD 500 million loan from India for essential purchases of fuel and petroleum products and it is depleting forex reserves curtail its ability to pay for imports.
The US let a key sanction waiver expire where investors will be barred from accepting bond payments from Russia´s government after 12h NY time today. The US is rather force Russia into default. For the reminder of the year, Russia owes USD 1 billion in coupon payments on offshore bonds.

Credits
Visa issues EUR 3 billion of 3 bonds at 4, 7 and 12 years at 1.62%, 2.05% and 2.47%. Rating is Aa3.
Citi in talks to buy Deutsche Banks´s Mexican banking arm. Citi perps yield 7.26%.
Mexican credit entity Unifin USD bonds drop 8% on liquidity concerns. The company is expected to confirm the extension of its bond maturing in 2022 to 2024 and it does not provided details on a local debt issue which would be partially backed by the Mexican government.
Adani Green Energy plans to invest USD 7.7 billion in green energy projects in the Indian state of Andra Pradesh. 2024 bond in USD yields 6.90%.
Chinese developer Powerlong Real Estate plummet 10% for unknown reasons, but a downgrade fromk Moody´s to Caa1.

Currencies

The GBP finally fell against the EUR from 1.18 to 1.1650 after ECB´s Lagarde said she sees rates higher by the end of Sept.
The USD found a level of equilibrium at EUR 1.07: seems rate news are already priced in.
The ruble benefits from actual landscape and came from USD 60 to 56 today. As far as the sanctions remains there is no reason for a reversal.

Stocks
Snap reported a profit warning and drags the tech sector down: the Nasdaq closed at -2.4%. Indeed, the general picture, with the exemption of techs, remain unchanged and the recovery should continue today with futures in green.

Commodities
Crude future price rose to USD 115 (Brent) , after a 2 days decline, supported by thigh supply ands the prospect of rising demand from the upcoming start of the summer driving season in the US.
Keeping the pressure on Russian supply, an US official headed to India seeking to keep Indian´s purchases of Russian oil from rising.

Comments from the Russian minister saying that Russia should ask Gold or gas from the EU if further sanctions are imposed, support the recovery of the metal, which reached 1,868, in a slow but steady way up from 1,800.


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