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Norvik Research 27.07.2017

27/07/2017 17:09

Global developments

The Fed left interest rates unchanged supporting stock markets. The Fed stated that inflation stays below the target of 2% while economic short-term risks remain balanced. Global stock markets are moderately up amid mixed corporate earnings reports. Futures on S&P 500 are 0.1% higher. Eurostoxx 600 is marginally lower. Nikkei 225 is up 0.1%. The dollar index is flat. US 10Y yields are up 2 bps at 2.31%. Bloomberg commodity index is up 0.5%.

Oil prices were up yesterday supported by favourable inventories data. Crude oil inventories declined 7.2 mn bbl in the previous week to the lowest level since the start of the year. Kuwait agreed to cut crude oil sales volumes joining Saudi Arabia and UAE incentives to offset a global oil glut. Brent prices were up 1.5% yesterday and are up 0.1% today at $51.0/bbl.

Russia and CIS area developments and market colour

Minister of Economic Development Maxim Oreshkin estimated the Russian economy growth. According to the minister, GDP rose 2.7% YoY in Q2 2017 higher than 1.6% YoY in H1 and will continue accelerating in autumn. He noticed improvement not only in the economic growth but also in corporate lending due to lower interest rates.

Weekly inflation in the previous week came out at 0.0% compared to the previous reading of 0.1%. In yearly terms, according to our estimates, inflation declined from 4.3% to 4.2% YoY.

The rouble is 0.2% weaker against the dollar at 59.5. OFZ yields 3-6 bps tighter today. Russia’s and Kazakhstan’s longer term sovereign yields are 4-5 bps tighter today.

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