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Norvik Research 17.08.2017

17/08/2017 18:11

Global developments

ECB officials expressed concern over strengthening euro while Fed’s officials are concerned about subdued inflation. Too strong euro may decrease import goods prices and undermine ECB’s efforts to reach its inflation targets. The dollar index is up 0.1% today. US 10Y yields are flat at 2.22%. Futures on S&P 500 are 0.3% lower today after Trump disbanded two high-profile business advisory councils after two CEO’s resigned in response to his comments on weekend violence in Virginia. Eurostoxx 600 is 0.3% down today. Nikkei 225 is down 0.1%. Bloomberg commodity index is marginally lower. Gold is 0.5% up.

Oil prices are down as investors weighed rising US crude oil output against declining stockpiles. US crude output demonstrated the biggest weekly gain since June and reached the highest level since June 2015. On the contrary, US crude oil inventories were down by 8.9 mn bbl declining for the 7th week in a row. Brent prices are up 0.5% today at $50.5/bbl.

Russia and CIS area developments and market colour

Weekly inflation was negative for the third consecutive week. Weekly inflation for the week ending 14 August came out at -0.1% and in yearly terms, according to our estimates, inflation reached 3.8% YoY.

Russia’s consumer demand data for July indicate an extended improvement. Real retail sales rose 1.0% YoY in July in line with consensus forecast, after a 1.2% YoY growth in June. Real wages were 4.6% YoY higher than consensus of 3.1% YoY after going up 3.9% YoY in June (revised up from a 2.9% YoY increase). Real disposable income declined in July by 0.9% YoY after being flat in June. A visible rebound in consumer demand indicators together with low inflation may be viewed as favourable conditions for CBR for cutting the key rate on 15 September.

The rouble is up 0.2% against the dollar at 59.2. OFZ yields are 1-3 bps lower. Russia’s and Kazakhstan’s longer term sovereign yields are 1-2 bp lower today.

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