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Morning Commentary: Russia rebounds a bit; Asian rally continues; demand for Kazakhstan
By Christine Van Dusen
Atlanta, Dec. 19 – Bonds from Russia moved up on Friday morning after taking a beating this week on the back of lower oil prices and a rate increase intended to fortify the ruble.
“It’s good to see the market having some recovery off the lows,” a London-based trader said.
The currency strengthened as oil prices stabilized and the Russian finance minister said the ruble should rebound in the new year.
Russia’s 2030s got a lift on Friday morning, to 104.875, he said.
“Russian oil and gas names – Gazprom, Sibneft – are up a point,” he said.
Also on Friday morning, bonds from Asia continued to rally, with high-grade bonds moving as much as 5 bps tighter, another London-based trader said.
“Flow in Asia was rather quiet,” he said. “We saw good real-money demand out of London, looking to square positions before year-end. Very thin liquidity.”
In other trading, good demand was seen for bonds from Kazakhstan.
“That’s in part because of short-covering, with oil bouncing, but partly a move to go overweight versus the index,” he said.
From Turkey, investors were interested in notes from financial companies, he said.
“Seems like January has come early to that space,” he said. “More interestingly, some of our buyers are long-term participants that have sat out most of 2014 but are now getting in. Inevitable new money coming to the asset class.”
Ukraine, which continues to grapple with a conflict with Russia-backed separatists, saw its bonds rally into the end of the week amid limited liquidity, said Fyodor Bagnenko, a fixed-income trader from Dragon Capital.
“News flow was limited,” he said.
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