Norvik Research 03.02.2017

03/02/2017 18:30

Global developments

Stock markets and the dollar are rising ahead of today’s US labour market data. Market consensus is for an increase in non-farm payrolls in January of 180K, after 156k in December. The dollar index is up 0.3%. EURUSD is down 0.2% at 1.073. 10-year UST yields are up 2bps at 2.49%, 10-year Bund yields are 1 bps lower at 0.44%. S&P 500 futures are up 0.3%. Nikkei 225 is flat. EuroStoxx 600 is up 0.6% today. Industrial metal prices are lower after China’s factory data came out below expectations. Gold prices are 0.2% lower.

Oil prices are broadly unchanged as market focus has shifted to risk of new US sanctions against Iran. Brent prices are up 0.3% at $56.8/bbl.

Russia and CIS area developments and market colour

This morning, Russia’s Finance Ministry published its estimate for windfall hydrocarbon revenues in February. Revenues in excess of budget projections have been estimated at RUB 113.1bn or $1.9bn at the spot exchange rate. This translates into daily FX interventions of RUB 6.3bn ($106mn) over 18 trading sessions between 7 February – 6 March. The daily size of interventions is marginally above the higher end of market projections, of $100mn, leaving the rouble little changed post-announcement. At the current level of oil prices the projected increase in the current account surplus should still be higher than the sum of FX interventions, so the path of the rouble should be determined by the external environment and capital flows.

Russia’s central bank left its key policy rate unchanged at today’s meeting, in line with nearly uniform market expectations. In its press statement the CBR projected the impact of planned FX interventions on the money market to be close to neutral while warning that the scope for policy rate reduction in H1 2016 has narrowed. The fairly hawkish statement has reduced the likelihood of a rate cut in March. We still see some room for an early resumption of the easing cycle provided oil prices hold steady (supporting the rouble and capital inflows) while inflation falls further.

The rouble is 0.2% stronger at 59.3 against the dollar. OFZ yields are slightly tighter today following yesterday’s rally. Russia’s and Kazakhstan’s longer term sovereign bonds yields are 1-2 bps wider today. Ukraine sovereign yields are broadly flat.

For more information on the research, please click here.

Norvik Banka Research
+44 207 259 8854
research@norvikuk.com

Brokerage department
+371 6701 1561
broker@norvik.eu

Disclaimer
This report is prepared by Norvik Banka UK Limited, of 46-48 Grosvenor Gardens, London, SW1W 0EB, United Kingdom (hereinafter referred to as the Company) as a marketing communication for information purposes only. Neither the information nor any opinion contained in this report (notwithstanding the source) is intended to be, or should be construed as an offer, a recommendation, an advice or an invitation to make an offer, to buy or sell any financial instrument. Information contained in this report constitutes neither investment nor tax advice and it does not take into account the specific investment objectives, risk appetite and financial situation of anyone who may receive this report. Investors should seek their own advice regarding the appropriateness of investing in any financial instrument discussed in this report and carefully evaluate the risks and eventual losses that are related to the investment services and its compliance with their investment goals.
Investors should note that any income derived from investments in financial instruments may fluctuate and that the price or value of securities and investments may rise or fall. Accordingly, investors may lose their investment or receive back less than originally invested. Past performance and income is not a guide to future performance and income. Foreign currency exchange rates may adversely affect the value, price or income of any security or related investment mentioned in this report. Investing in the Russian or CIS economies and securities involves a high degree of risk and requires appropriate knowledge and experience.
The information contained in this report have been obtained from such public sources what are believed to be reliable, but no representation or warranty is made by the Company with regard to accuracy. Therefore the information contained herein is subject to change without prior notice.
This report should not be viewed as the only source of information, and neither the Company, nor the companies within the NORVIK group and/or any affiliates or employees thereof accept any responsibility or liability whatsoever for any direct or indirect damage arising out of or in any way connected with the use of information contained herein, nor for its authenticity.
This report may not be distributed, copied, reproduced or changed without prior written consent from the Company. Further information, which for the avoidance of doubt cannot be treated as the recommendations and/or advice either, may be obtained from the Company upon request.
This report has not been prepared on the basis of the requirements of regulatory provisions promoting independence of investment research and is not subject to the prohibition from making transactions before disseminating investment research.
Norvik Banka Research is a Trading Name of Norvik Banka UK Ltd, which is Authorised and Regulated by the Financial Conduct Authority, FRN: 681329. Registered in England and Wales with number 08940522. Registered Office: 46/48 Grosvenor Gardens 1st Floor, London, SW1W 0EB.

Disclaimer
The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful.

This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in; Security, archiving and compliance. To find out more Click Here.

Latest news