Oil agreement boosts EM assets; Hungary trades up; Russia improves; Brazil outperforms

By Christine Van Dusen

Atlanta, Dec. 1 – Emerging markets assets improved slightly on Thursday after the recent meeting of oil producers yielded a production-cut agreement.

“Yesterday, OPEC reached a first oil production cut deal since 2008,” according to a report from Schildershoven Finance BV. “Members of the cartel and main producers outside the group will cut [their] production by 1.2 million barrels per day.”

As part of the agreement, Iran will be permitted to increase its production to the level seen before sanctions, and Nigeria and Libya were exempted. Saudi Arabia will reduce its production by 210,000 barrels per day, Iraq by 210,000 per day and Russia by 300,000 per day.

Latin American bonds were supported by the agreement and increased a bit, a trader said.

Brazil’s 2023s outperformed on Thursday, he said, and were back to a record rich level as compared to the sovereign’s 2025 notes.

“One large dealer buying,” he said. “It’s the only thing that has had any consistent buying in the last three days.”

In other trading, Hungary’s 5¾% 2024 bond was up on Thursday morning at 109.875, and Poland’s 3% 2023 notes – which priced at 98.448 – traded at 98.50, another trader said.

Taking another look at Russia, bonds there also received support from manufacturing data, which showed signs of economic recovery, Schildershoven said.

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