18 May 2018
The new wave of Treasuries price drop forced further sell-off in the Russian Eurobonds and the other sovereign liabilities of the EM. Yield of Russia 47, the long Russian benchmark, reached 5.79% (+4 bps).
Market situation. Yield of the 10Y American Treasuries continued rising, climbing up to 3.12% at the highest. The new wave of Treasuries price drop forced further sell-off in the Russian Eurobonds and the other sovereign liabilities of the EM. The state bonds were under the pressure in the morning on Thursday. The sell-off suspended in the Russian notes later on and the sovereign segment continued consolidating near the levels reached. Probably, the new local highs, reached by the energy carriers’ prices have supported the quotes. Resulting from that, the sovereign curve moved 3-4 bps up yesterday. Yield of Russia 47, the long Russian benchmark, reached 5.79% (+4 bps). The corporate bonds were mixed. The Eurobonds of MCB were underperforming.
The Russian domestic market was mixed on Thursday. For the day, the ruble OFZ managed to win back the loss accumulated in course of the day, showing outperforming the dynamics of the majority of EM competitors. The curve closed 1-2 bps lower in terms of the yield.
Market situation. The Russian domestic market was mixed on Thursday. OFZ opened with quotes decline and suffered from the pressure of the rising yields of the core assets. Buyers started overweighting at daytime. Resulting from that the state bonds managed to win back the loss accumulated in course of the day, showing outperforming the dynamics of the majority of EM competitors. The curve closed 1-2 bps lower in terms of the yield. The spread within 2 to 10Y reduced slightly and totaled 60 bps. Trade activity was low yesterday and stayed below the average. The daytime turnover formed approximately RUB 23 bn. Same as within the previous sessions, this week the floaters were in sight of the investors. As for the notes with the fixed coupon, the long-term series 26221 (YTM 7.57%, -1 bps) was in demand, along with 26207 (YTM 7.36%, -2 bps), which usually is the favorite one for the foreign investors.
Forecast. No important macroeconomic releases are scheduled for Friday. We expect the local market to be consolidating near the current levels in terms of the lack of any drivers on the threshold of the weekend.
Author: Julianna Lukyanova
Ruble was getting weaker along with the other EM currencies, however, the oil prices limited loss in the national currency.
Thursday, ruble opened 15 kopeks below Wednesday close level, however, within the first hour of trade the currency tried to balance. Attempts have failed, and then dollar firmed its positions climbing above RUB 62 by the middle of the day. At large, ruble was losing vs dollar along with other EM currencies. Nevertheless, by the end of the day the domestic currency was losing “just” 0.2%, while the Turkey and SAR currencies were losing nearly 1%. The oil prices were limiting the loss in ruble climbing up to USD 80 per barrel several times during the day.
The volume of liquidity absorption within the frames of the weekly deposits accompanied by the start of the tax term started gaining traction at the interbank market: MosPrime o/n was upping for the second day straight staying above the level of the key CBR rate.
Author: Julianna Lukyanova