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Norvik Research 03.08.2017

03/08/2017 16:40

Global developments

Sentiment is overall positive due to comparatively positive corporate earnings data while investors are waiting for Friday’s US employment data. Futures on S&P 500 are slightly higher just marginally lower than the historical high. Eurostoxx 600 is flat. Nikkei 225 is down 0.3%. The dollar index is up 0.2%. US 10Y yields are down 2 bps at 2.25%. Bloomberg commodity index is down 0.3%.

Oil prices are up supported by favourable inventories data. Crude oil inventories declined 1.5 mn bbl in the previous week, while gasoline inventories were down for a seventh week in a row. Brent prices are up 0.6% today at $52.7/bbl.

Russia and CIS area developments and market colour

Weekly inflation in the previous week was negative. Inflation in the week to 31 July came out at -0.1% WoW. According to our estimates, headline inflation declined to 4.0% YoY from 4.2% YoY.

MinFin increases FX purchases in August. Due to a recent increase in oil prices MinFin will purchase about $35mn per trading session compared to near zero purchases in July.

Donald Trump signed the bill approving new sanctions against Russia. The new legislation levies new sanctions and restricts Trump’s ability to ease them. Trump criticized the legislation saying that it limits executive branch’s authority to negotiate and thus makes it harder for the United States to strike good deals. The Ministry of Foreign Affairs of Russian Federation expresses regret about the law while Dmitry Medvedev interpreted the law as a victory of US establishment over Trump and predicted that future relationships between Russia and US will be extremely tense.

The rouble is 0.5% stronger against the dollar at 60.3. OFZ yields 3-7 bps tighter in the longer end today. Russia’s and Kazakhstan’s longer term sovereign yields are broadly flat today.

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