Oman preps; flows muted; oil prices, Trump eyed; Turkey underperforms; Guangzhou issues

By Christine Van Dusen

Atlanta, Jan. 3 – Oman planned a new issue of dollar bonds on a Tuesday that saw mostly muted flows for emerging markets assets as issuers and investors returned from the winter holidays. Now, market-watchers are looking ahead to the release of payroll data and the Federal Open Market Committee’s minutes from December.

“On the political front, Trump has all eyes on him as we’re nearing his cabinet’s inauguration on Jan. 20,” a London-based analyst said. “With that in mind, we are likely to see further volatility on the U.S. dollar and rates.”

Oil was also in focus on Tuesday, with prices under pressure after Kuwait announced it had lowered production to comply with the deal among regional producers.

Turkey, for one, underperformed during the session and saw some selling of long-dated dollar paper after a terrorist attack in Istanbul and ahead of a Jan. 27 Fitch Ratings review, a trader said.

“I can't see any serious repositioning ahead of that, so it’s United States Treasuries and headline risk to deal with,” he said.

Banks from Turkey are likely to be hit most by any ratings change, the analyst said.

Looking to the Middle East, the tone was firm on Tuesday, the trader said.

“Locals are putting cash to work on top of the U.S. Treasury move,” he said. ”December really was a choppy month, and unfortunately I think that was just a taster for what 2017 has in store.”

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