Download 27 January 2017 Global developments Government bond yields, the

27 January 2017
Global developments
Government bond yields, the dollar and oil prices corrected lower
following the release of weaker-than-expected US GDP data. The initial
estimate for Q4 2016 GDP point to a decline in growth to 1.9%, from 3.5% in
Q3, compared to the 2.2% consensus forecast. Growth was held back be the
strongest drag from trade since Q2 2010 while non-residential fixed
investment was at a 5-quarter high. The early 2017 US growth indicators
were strong however, with Markit Services PMI in January rising to 55.1
against consensus forecast of 54.4. Yields on 10-year UST fell 3bps to 2.49%
following the GDP data, while 10-year Bund yields dropped 2 bps to 0.46%.
The dollar index corrected 0.4% lower and is down 0.2% on the day. The
pound is 0.2% weaker against the dollar ahead of the first meeting between
the leaders of the US and the UK. Gold prices are down a further 0.3% today.
S&P 500 futures are marginally higher today. EuroStoxx 600 is 0.3% lower.
Asian stocks are higher: Nikkei 225 is up 0.3% and China’s CSI 300 up 0.4%.
Oil prices are 1.4% lower at $55.4/bbl (Brent) in the wake of weak US
GDP data. Algeria’s Energy Minister said today that oil producers are due to
reach 1.8 mn bbl/day output reduction target already next month.
Russia and CIS area developments and market colour
Global markets (% change)
Latest
2295.1
S&P
1d
-0.1
1w
1.0
Ukraine’s central bank yesterday kept its key policy rate unchanged at
14.0%, having revised its 2017 inflation and GDP growth forecast. In its
press statement accompanying the widely anticipated decision, the NBU
warned of higher inflation pressures as a result of a hike in the minimum
wage since the beginning of the year and associated improvement in
consumer demand, as well as the hryvnia’s weakening in late 2016-early
2017. The NBU has revised its end-2017 inflation forecast from 8.0% YoY to
9.1% (closer to our own latest forecast of 9.0%) and its full-year 2017 GDP
growth forecast from 2.5% to 2.8% (which looks optimistic to us). New
forecasts are due to be detailed in the NBU’s inflation report on 2 February.
YTD
2.5
UST 10y y ield, % (bps change)
2.49
-1
3
5
Brent, $/bbl
55.4
-1.4
-0.1
-2.4
Gold, $/t oz.
1185.1
-0.3
-2.1
3.3
DXY (USD TW index)
100.5
0.1
-0.3
-1.7
EURUSD
1.071
0.2
0.0
1.8
USDRUB
59.8
Russia and CIS (bps change) Latest
-0.9
0.3
-2.8
1d
1w
YTD
0
1
-14
Russia-28 y ields, %
4.6
Ukraine-24 y ield, %
8.59
1
11
-11
Kazakhstan-45 y ield, %
5.26
-1
0
-19
OFZ Feb-27, % p.a.
8.16
-13
13
-9
MOSPRIME O/N, %
10.48
4
18
-72
RUONIA 6m, %
10.21
0
-1
0
RUBUSD is 0.9% stronger today, recouping most of yesterday’s losses
as the initial reaction to FX interventions news faded. OFZ yields are 4-7
bps lower today after a turnaround yesterday afternoon. Russia’s Eurobond
yields are 4-5 bps tighter today, Ukraine yields are 2-5 bps lower.
Contacts
Key Global econom ic data and events calendar
Research Team: +44 207 259 8854 [email protected]
Brokerage Dept: +371 6701 156 [email protected]
Key CIS econom ic data and events calendar
Date
Country
Data
Consensus
Actual
Date
Country
Data
Consensus
Actual
24-Jan
US
Jan Markit manuf PMI
54.5
55.1
23-Jan
Ukraine
Dec Industrial Production Y oY
2.5%
4.5%
24-Jan
UK
UK Supreme Court Article 50 v erdict
23 Jan-3 Mar
Ukraine
Q4 Cur account balance
-$800mn
24-Jan
US
Dec existing home sales
5.5mn
5.5mn
23-Jan
Russia
Dec Industrial Production Y oY
1.7%
25-Jan
Germany
Jan IFO Business Climate
111.3
109.8
25-Jan
Russia
Weekly inf lation
26-Jan
US
Dec wholesale inv entories MoM
0.1%
1.0%
25-Jan
Russia
Dec unemploy ment rate
5.5%
5.3%
26-Jan
US
Jan Markit serv ices PMI
54.4
55.1
25-Jan
Russia
Dec real disposable income Y oY
-5.1%
-6.1%
27-Jan
US
Q4 GDP annualised QoQ
2.2%
1.9%
25-Jan
Russia
Dec real wages Y oY
1.5%
2.4%
27-Jan
US
Dec durable goods orders MoM
2.5%
-0.4%
25-Jan
Russia
Dec real retail sales Y oY
-3.7%
-5.90%
27-Jan
US
Jan U. of Mich. Sentiment
98.1
98.5
25-Jan
Russia
PPI Y oY
7.0%
7.4%
3.2%
0.1%
Sources: Bloomberg, Cbonds
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