Norvik Research 27.01.2017

27/01/2017 18:25

Global developments

Government bond yields, the dollar and oil prices corrected lower following the release of weaker-than-expected US GDP data. The initial estimate for Q4 2016 GDP point to a decline in growth to 1.9%, from 3.5% in Q3, compared to the 2.2% consensus forecast. Growth was held back be the strongest drag from trade since Q2 2010 while non-residential fixed investment was at a 5-quarter high. The early 2017 US growth indicators were strong however, with Markit Services PMI in January rising to 55.1 against consensus forecast of 54.4. Yields on 10-year UST fell 3bps to 2.49% following the GDP data, while 10-year Bund yields dropped 2 bps to 0.46%.

The dollar index corrected 0.4% lower and is down 0.2% on the day. The pound is 0.2% weaker against the dollar ahead of the first meeting between the leaders of the US and the UK. Gold prices are down a further 0.3% today. S&P 500 futures are marginally higher today. EuroStoxx 600 is 0.3% lower. Asian stocks are higher: Nikkei 225 is up 0.3% and China’s CSI 300 up 0.4%.

Oil prices are 1.4% lower at $55.4/bbl (Brent) in the wake of weak US GDP data. Algeria’s Energy Minister said today that oil producers are due to reach 1.8 mn bbl/day output reduction target already next month.

Russia and CIS area developments and market colour

Ukraine’s central bank yesterday kept its key policy rate unchanged at 14.0%, having revised its 2017 inflation and GDP growth forecast. In its press statement accompanying the widely anticipated decision, the NBU warned of higher inflation pressures as a result of a hike in the minimum wage since the beginning of the year and associated improvement in consumer demand, as well as the hryvnia’s weakening in late 2016-early 2017. The NBU has revised its end-2017 inflation forecast from 8.0% YoY to 9.1% (closer to our own latest forecast of 9.0%) and its full-year 2017 GDP growth forecast from 2.5% to 2.8% (which looks optimistic to us). New forecasts are due to be detailed in the NBU’s inflation report on 2 February.

RUBUSD is 0.9% stronger today, recouping most of yesterday’s losses as the initial reaction to FX interventions news faded. OFZ yields are 4-7 bps lower today after a turnaround yesterday afternoon. Russia’s Eurobond yields are 4-5 bps tighter today, Ukraine yields are 2-5 bps lower.

For more information on the research, please click here.

Norvik Banka Research
+44 207 259 8854

Brokerage department
+371 6701 1561

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.

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