Fixed Income Comment: Yesterday witnessed a generally quiet day in EM trading

Yesterday witnessed a generally quiet day in EM trading. Russia opened slightly
stronger but traded in a very narrow range despite an improving UST market. The
10-year UST traded through 4%, with spreads edging out towards +320 bps. First
trade this morning was at 96.5 (T+325 bps). Turkey followed the general market
lower despite the good news on the Penal Code. Brazil weakened in line with the
softer equity markets. Given that oil prices are expected to remain high, and move
even higher given the political situation in Nigeria, the US Treasury market will
remain well supported, although this is unlikely to result in spread narrowing.
Economic slowdown fears currently outweigh any inflationary concerns, although
this market consensus could be shaken if oil prices accelerate past US$60 pb, with
New York oil prices having just eased past the psychological US$50 pb level.