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Norvik Research 08.06.2017

08/06/2017 15:56

Global developments

ECB left all three interest rates unchanged and confirmed asset purchase program at EUR 60bn through December. According to the press release, “the Governing Council expects the key ECB rates to remain at their present levels for an extended period of time”. ECB President Mario Draghi will hold a press-conference at 12:30 GMT.

S&P 500 futures are slightly higher today. Eurostoxx 600 is down 0.2%. The dollar index is 0.2% higher. US 10Y Treasury yields are 2 bps higher at 2.20% after rising 3 bps yesterday.

Oil prices contracted due to an unexpected increase in inventories. Crude oil inventories rose 3.3 mn bbl in the previous week. Brent prices are down 0.4% today at $47.9/bbl after falling 4.1% yesterday.

Russia and CIS area developments and market colour

Russia’s headline inflation in May stayed at 4.1% YoY in May. The outturn was slightly worse than market consensus (4.0%). Officially measured core inflation fell to 3.8% YoY from 4.1% in April. Food price inflation rose to 3.9% YoY from 3.6% in April while non-food goods inflation fell to 4.4% from 4.7%. Services inflation marginally declined to 4.0% YoY from 4.1% YoY in April. The latest inflation dynamics is supportive of an interest rate cut of 25-50 bps on 16 June.

Corporate news

On Wednesday, The Wall Street Journal has reported that Russia could buy back the stake in Rosneft it sold to Qatar and Glencore. According to the report, Rosneft agreed to Qatar Investment Authority’s (QIA) condition that Russia would have an option to buy back the share. However, today QIA has denied the possible buyback as one of the conditions of Rosneft’s 19.5% stake.

In Russia’s Bashkortostan region the court began hearings of Rosneft’s claim on Sistema. The region’s government approves the claim, which was raised to 170.6 billion roubles. Sistema’s representative still dismisses the claim. The company’s 2019 Eurobond slightly declined on the news. Z-spread rose 50 bps to 408 points.

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