Risk appetite has fallen further as anxiety about the outcome of the US presidential election spreads. The latest opinion polls show the two candidates running neck-in-neck in the popular vote, with Clinton retaining marginal lead in most battleground states. The Mexican peso, widely seen as a proxy for Clinton’s odds to win, fell 1.8% yesterday and a further 0.9% today to 19.4 against the dollar today while staying stronger than its level before the first round of debates.
The US ISM Manufacturing came out at 51.9 yesterday, compared to consensus of 51.7 after 51.5 in September. Eurozone aggregate October PMI reading was 53.5, higher than consensus of 53.3. S&P futures are 0.3% lower after the benchmark index declined 0.7% yesterday, Euro Stoxx 600 is 0.6% lower, CSI 300 is 0.8% lower while Nikkei 225 is down 1.8%. 10-year US treasury yields fell 3 bps to 1.80%. The dollar index fell 0.7% yesterday and is down 0.2% today. The market-implied probability of an interest rate hike in December declined from 72% to 68%. Safe haven assets including the yen, the Swiss franc and gold gained 0.7%, 0.1% and 0.6% respectively.
Oil prices declined further amid rising oil output in Libya and Nigeria and increased US inventories. The American Petroleum Institute yesterday reported the highest weekly crude oil inventories build-up since March, of +9.3 mn bbl. Libya and Nigeria are estimated to have increased their combined output by 0.8mn bbl/day since September. Brent prices are down 1.5% today at $47.4/bbl.
Russia and CIS area developments and market colour
The pace of inflation in Russia decelerated to 0.1% in the week to 31 October, from 0.2% in the previous week, or to 6.1% YoY from 6.2% YoY.
The rouble is 0.2% weaker at 63.4 against the dollar. OFZ yields are 1-4 bps wider today. Russia and Kazakhstan longer-term sovereigns are about 1-2 bps wider. Ukraine sovereign yields are 12-17 bps wider.
Gazprombank has announced a roadshow for a new euro-denominated Eurobond issue starting 7 November in Europe.
Lukoil has reportedly been invited to participate in Rosneft’s privatization. According to a report in today’s Vedomosti, Vladimir Putin extended this invitation during a meeting with Lukoil’s president Alekperov at the end of August. Other companies targeted by the Russian government as potential investors during the forthcoming sale of the 19.5% stake in Rosneft include Kazakhstan’s Kazmunaigas, Surgutneftegas and China’s Sinopec.
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