Morning Commentary: EM names get support from oil prices; Ghana outperforms; Turkey weakens

By Christine Van Dusen

Atlanta, Dec. 12 – Higher oil prices gave many emerging markets names a boost on Monday morning as investors awaited the Federal Open Market Committee meeting, set for Tuesday and Wednesday.

“While we see oil producers trading tighter this morning, the OPEC and non-OPEC deals also support the reflation trade initially triggered by [U.S. president-elect Donald] Trump’s potential fiscal spending increases,” a London-based analyst said.

Saudi Arabia’s bonds, he said, were trading 5 basis points tighter than Friday’s levels.

The surge in oil prices also gave Bahrain, which suffered after a downgrade on Friday from S&P Global Ratings, a lift. The sovereign’s bonds opened 6 bps tighter on Monday, he said.

Oil also buoyed bonds from Ghana, which outperformed on Monday, trading about 15 bps to 20 bps tighter, he said.

But most of the improvement for Ghana’s paper came from the news that the opposition party won last week’s election.

Looking to Turkey, bonds opened weaker on Monday after releasing disappointing gross domestic product numbers for the last quarter.

“The quarter was undoubtedly under pressure after the July 15 coup attempt,” the analyst said. “Saturday’s tragic terrorist attack close to a football stadium in Istanbul is a further sign that Turkey continues to face heightened risks in its fight against terrorist groups.”

As the morning went on, Turkish bond yields came off the wides, “with Street offers pulling back,” a London-based trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.