The ruble will not be able to grow without the support of OPEC+

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It’s impossible to ignore one custom theme, which is rarely beyond the narrow circles of theorists debt markets, but which this time attracted a surprisingly wide audience of journalists, and for this reason became known to the public. The fact that earlier this week yields on 3-year U.S. Treasury bonds for the first time were higher than those on 5-year bonds. The last time this happened in 2007, on the eve of the previous us recession.
This is called inversion of the yield curve or, at least, as we have in our situation – a small segment of the curve between 2 – and 5-year maturities. Many sophisticated analysts already foresee what will happen to the markets when the 2-year and 10-year yield “treasuries” are generally swapped – then there will be a full wide-range inversion, and the fed is unlikely to publicly ignore this fact.
Recession or not, but the market obviously sees more low rates the fed in the future – this is inevitable, to “hack to death on the vine” recessionary sprouts, and if this is not done, then it will be possible to speak about high probability of the economic consequences. That is, important here is the exact wording: the recession is not inevitable, but it will take an informal approach, which, frankly, in recent years, unusual for the Central Bank.
Meanwhile, the main theme of the day remains the OPEC meeting+ in Vienna. In this regard, the Minister of energy of Russia Alexander Novak said that his discussion with “al-Valicom” on Wednesday morning it was “good”, but added that for the formulation of final decisions of OPEC + will require more negotiations.
Subsequently, al-falih met with producers of the Persian Gulf, including Kuwait, Iraq, UAE and Oman in order to develop a preliminary consensus. Recall that oil Minister of Saudi Arabia Khalid al-falih his comments Tuesday in an interview with Bloomberg, has sown deep uncertainty among global oil traders, saying that while Russia supports the reduction of quotas in essence, their depth remains the main bone of contention. He also said that OPEC + while there is no ready prescription for this question.
The third important theme of the day was the sensational arrest of the chief financial officer of Chinese technology giant Huawei Meng Wanzhou in Canada for its transfer to the US authorities, having it some the claims trading-legal character (there are no details yet). This turn of events clearly affected the morning market sentiment in Asia, as investors assessed the economic impact the already strained relations between the US and China.
Shares of technology companies in the region were this morning under heavy pressure, including many partners and suppliers of the Corporation and Huawei.
Based on this, and yesterday’s verbal “exchange of courtesies” between the presidents of Russia and USA in the context of the risks of an escalation of the arms race, the ruble began today in a minor, screened from the open with 66,57 to 66.86 per dollar as of 12:00 Moscow time, however, as we anticipated in yesterday’s review, for a stronger movement ahead of the outcome of the summit of OPEC+ is still not decided. In tandem with the Euro, the domestic currency traded at the level 75,72, demonstrating, in contrast to the pattern in tandem with the dollar, a surprising stability for the third day in a row.
Vladimir Rojankovski,
“International Financial Center”