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JPMorgan Chase & Co
Yields on Russia’s ruble bonds rose for the first time in three days as producer-price growth slowed and a senior cabinet member urged interest-rate cuts.
The yield on Russia’s ruble notes due July 2022 rose two basis points to 6.740 percent. The yield on government ruble bonds maturing in February 2027 climbed three basis points to 7.010 percent. The ruble slid as much as 0.2 percent against the dollar before trading little changed at 30.2655 by 7 p.m. in Moscow.
The government is trying to persuade the central bank to cut borrowing costs for banks and companies as economic growth slows, First Deputy Prime Minister Igor Shuvalov said in a Jan. 18 interview. Russia’s producer price index fell 1.1 percent in December from a month earlier and rose 5.1 percent from the same period a year before, Statistics Service data showed today. Economists polled by Bloomberg forecast 6.8 percent growth.
“Broad weakness in PPI further highlights lack of any inflationary pressures and general weakness of any demand,” Vladimir Osakovskiy, chief economist at Bank of America Merrill Lynch in Moscow, said by e-mail today. “Signs of weak inflationary pressures will likely be marginally negative news for the ruble, as they continue to build a case for monetary easing by the central bank.”
Monetary-policy makers left borrowing costs unchanged this month after unexpectedly raising them in September. They removed a phrase from their statement that market rates were acceptable for the “nearest future,” which central bank First Deputy Chairman Alexei Ulyukayev said opens the door for increases or decreases as soon as next month.
“We’re trying to persuade them, always, that now they need to reduce the rate,” Shuvalov said in the interview. “And they say, not yet. We think they could.”
Russia’s real GDP growth slowed down to 2.9 percent in the third quarter from 4.0 percent in the previous quarter. Economists polled by Bloomberg forecast further growth slowdown to 2.7 percent in the fourth quarter.
Crude oil, Russia’s biggest export, fell by 0.4 percent to $95.19 a barrel in New York trading. The ruble climbed less than 0.1 percent to 40.3135 against the euro, leaving it steady at 34.7871 against the central bank’s target dollar-euro basket.
The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries rose four basis points to 163, according to JPMorgan Chase & Co. (JPM)’s EMBI Global Index.
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