Russian bonds rally on strong oil prices, data in focus

The Russian bonds jumped on Tuesday, as the ruble was bolstered by a rebound in crude oil prices, pushing the yield on 10-year bonds down 9 bps. The benchmark 10-year bonds yield, which is inversely proportional to the price of bonds, fell 1.08 pct to 9.17 pct and 2-year bonds yield dipped 0.83 pct to 9.54 pct by 1025 GMT.

The Brent crude oil, a global benchmark for Russia's main export, was lifted today as Kuwait reported on Sunday that its crude production fell to 1.1 million barrel per day, from up 2.8 million barrel in March as workers went on stick. The International benchmark for crude oil prices, Brent futures rose 2.10 pct to $43.79, while West Texas Intermediate crude oil climbed 1.68 pct to $40.45 by 1025 GMT.

On the other hand, the Central Bank of Russia first deputy Governor Ksenia Yudaeva said that CBR will bring down the inflation figure to its target of 4% in 2017 as its strict monetary policy has already reduced inflationary expectations.

In addition, the Central bank of Russia is widely expected to keep the policy steady at its next board meeting on April 29 and start monetary easing later this year. The Russia’s GDP dynamics (seasonally adjusted) was flat in February 2016, as compared to 0.1% contraction in January, according to the monthly monitoring published by the Economic Development Ministry.

Meanwhile, Russia’s ruble appreciated 0.66% to 65.59 per US dollar and the benchmark MICEX Index of Russian stocks rose 1.77 pct to 193,450 by 1100 GMT.

Lastly, the investors will now focus on the upcoming unemployment figure (1900 GMT), which is expected to increase to 5.9 pct in March, from 5.8 pct in February and retail sales figure on Wednesday (2130 GMT), which is anticipated to decline 5.5 pct y/y, as compared to prior 5.9 pct y/y.