US Treasury yields and the dollar are higher today ahead of Donald Trump’s inauguration. Yields on 10-year UST are 3 bps higher at 2.50%, 2-year yields are up at 1.24%, following another set of comments late yesterday from Chair Yellen reiterating the Fed’s intention to raise interest rates “gradually over time”. The US dollar index rose 0.2% today. Gold prices are 0.4% lower after closing flat yesterday.
Stock markets globally are rising. S&P futures are 0.2% higher today after the index lost 0.4% yesterday. EuroStoxx 600 is 0.2% higher (but still down 0.6% this week). Nikkei 225 is up 0.3% while China’s CSI 300 is higher 0.8% following the release of better than expected macroeconomic data. Q4 GDP rose 6.8% YoY, above consensus forecast and Q3 outturn of 6.7% YoY. China’s retail sales rose 10.9% YoY in December (consensus: 10.7% YoY).
Oil prices are higher ahead of a meeting by OPEC’s compliance verification committee on 22 January. The Saudi Energy minister has estimated combined output cuts in January at 1.5mn bbl/day. Brent price is 1.2% higher at $54.8/bbl.
Russia and CIS area developments and market colour
Russia’s federal budget deficit widened modestly in December. On our estimates, on a 12-month rolling basis, budget deficit rose to 3.6% of GDP, from 3.5% of GDP in November. Total revenue increased from 15.4% of GDP in November to 16.0% of GDP in December due to higher non-hydrocarbon receipts (in fact, the extra revenue in December, of 0.8% of annual GDP, came from privatization of a stake in Rosneft, the largest oil company). Expenditure rose sharply to 19.6% of GDP, from 18.9% in November. The Reserve Fund was the main source of financing last month, its stock fell to $16bn at end-2016 from $31.3bn in November and $50bn at end-2015.
The rouble is little changed today against the dollar at 59.8. OFZ yields are marginally lower today. Russia’s and Ukraine’s longer-term sovereign Eurobond yields are flat, after the court in London ended hearings in the case of Ukraine’s missed $3bn Eurobond payments without any announcements. Kazakhstan’s yields are 4-5 bps wider.
For more information on the research, please click here.
Norvik Banka Research
+44 207 259 8854
+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.