HALISTER1: Ruble, Bonds Rise Third Day as Inflation Slows: Inside Russia

Ruble, Bonds Rise Third Day as Inflation Slows: Inside Russia

(Bloomberg) -- The ruble strengthened for a third day against the dollar, while Russian government bonds also climbed as HSBC and Credit Agricole recommended going long on slowing inflation.
  • RUB advances 0.3% to 57.6650/USD, after touching highest in a week
  • NOTE: Weekly inflation in Russia was zero in seven days to Oct. 9 for the fifth straight week
  • Bank of Russia will front-load rate cuts and lower key rate by 75bps later this year on the back of “powerful” disinflation, Credit Agricole analyst Sebastien Barbe writes in a research note
    • Barbe recommends long OFZ bonds due Jan. 2023 with 7.08% target, down 40bps from current levels
  • Taylor rule suggests neutral nominal policy rate for Russia is about 4.5%-5%, meaning Bank of Russia will likely “over deliver on its guidance,” HSBC analyst Radoslaw Bodys writes in research note
    • Bodys recommends long OFZ bonds due Aug. 2021 with 6.8% target, down 70bps from current levels
  • Brent oil for December falls 0.4% to $56.73/bbl
    • Brent crude in ruble terms falls to 3,269 vs 12-month average of 3,103
  • Yield on Russian government bond due Feb. 2027 -1bp to 7.53%
  • Micex index of shares declines 0.1% to 2,098.14
TODAY:
  • 4pm: Bank of Russia reports weekly change in FX, gold reserves
  • 4pm: Bank of Russia reports August trade balance (est. $5b surplus)
  • 4pm: Bank of Russia reports foreign debt est. as of Oct. 1
BOND AND MONEY MARKETS:
  • Treasury offers 400b rubles in 1-day OFZ repo auction
  • Treasury offers 350b rubles in 7-day OFZ repo auction
  • Treasury offers 55b rubles in 96-day deposits
  • Bank of Russia sets 520b rubles limit at 4-day “fine tuning” deposit auction
  • Pension Fund offers 7.2b rubles in 94-day deposits
  • VTB offers 75b rubles in one-day bonds
To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Neil Chatterjee

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Radoslaw Bodys (HSBC Holdings PLC)
Sebastien Barbe (Credit Agricole Corporate & Investment Bank SA)

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