26 Jun 2019 13:38

VIEWPOINT: Federal bond market quietly starting to correct - Rosbank

MOSCOW. June 26 (Interfax) - "Even if we disregard the volatility caused by the sanctions headlines we can see that the OFZ federal bond market is quietly starting to correct," said analysts at Rosbank. "The reasons for this are varied and range from a local escalation of concerns over a possible hard Brexit and EM currencies sell-off to the closure of Russian debt positions by major foreign investors. As a result, the good start to Tuesday's session was short-lived and yields were up 1-3 basis points by close. Not even the Finance Ministry's extremely modest offering for the Wednesday auction of 20 billion rubles in 11-year series 26228 was able to help. As always, we are not inclined to make far-reaching conclusions from episodic corrections following a strong rally. The end of a quarter and half-year automatically trigger profit-taking by some market players. Given that even yields for the longer benchmarks offer a minimal premium over the key rate (7.56% per annum for 20-year 26230) and that the Bank of Russia is not so far rushing to send out new signals about monetary easing, the reasons for any new spike in demand for OFZ will probably lie in the world markets, such as breakthroughs in talks between the United States and China at the G20 summit and a strengthening belief that the Fed Funds rate will be lowered as early as July," the analysts said.

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