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Norvik Research 23.12.2016

23/12/2016 16:28

Global developments

European stocks are marginally higher after two days of declines. Euro Stoxx 600 is slightly higher after Italy’s government said it will inject EUR 20bn into the country’s banks including Banca Monte dei Paschi Siena. S&P 500 futures are slightly higher after the index lost 0.2% yesterday. Nikkei 225 is down 0.2%. The CSI 300 declined 0.8% today. Gold is up 0.2%.

US macroeconomic data were stronger than expected. Q3 annualised GDP came out at 3.5% QoQ versus consensus forecast of 3.3% QoQ. Q3 personal consumption was 3.0% QoQ (consensus 2.8% QoQ). The US dollar index is marginally lower today. 10-year US Treasury yields are down 1 bp today to 2.54%.

Oil prices (Brent) are lower on seasonally higher inventories levels. Brent price is 0.8% lower at $54.6/bbl.

Russia and CIS area developments and market colour

President Putin’s annual press conference today has so far been light on economic policy comments. Putin expressed support for the CBR’s efforts to rid the banking sector from weak players while reiterating his earlier call to ease regulatory burden for smaller banks. He confirmed the government’s intention to make a one-off payment to pensioners early next year and stated that the government has sufficient resources to index forthcoming social payments in 2017 on the basis of 2016 inflation (Putin specifically mentioned April 2017 as the target period for these higher payments).

Fitch has announced withdrawal of its national scale ratings in Russia, responding to a new regulatory framework. About 150 national scale ratings will be withdrawn by 31 March. Fitch is currently covering a portfolio of about 200 international debt issuers and will continue issuing international scale ratings.

The rouble is 0.2% weaker today at 61.1 against the dollar. OFZ yields are 1-4 bps tighter today. Russia and Kazakhstan longer-term sovereign Eurobond yields are about 1 bp wider. Azerbaijan-24 and Armenia-25 are broadly flat while Belarus-18 is 5 bps wider at 4.96%, Ukraine bond yields are little changed.

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This is the final issue of Fixed Income Daily – we wish our readers a nice holiday season and a prosperous year ahead

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