Daily Market Monitor: Thus we see a Russian Eurobond price decline in coming days

Investors were playing the waiting game on the Ruble bond
market on Tuesday as uncertainty over exchange-rate
dynamics balanced out favorable Ruble liquidity to leave few
trading ideas. We believe this equilibrium to be sustainable in
the coming days, although we do not exclude minor price
decline on low turnover – as happened last week.

The Russian Eurobond market was the most strained of the
Russian markets Tuesday, as the effects of a result in the US
election would have an immediate impact on the benchmark
bond market, easily translating to emerging-market
Eurobonds, including Russian ones. However, no significant
changes occurred Tuesday — the Russian sovereign spread
marginally increased by 2 bps to 254 bps on the back of a
near-constant UST.

As the impact of either candidate\'s victory on global markets
is unclear and with the election outcome highly uncertain, it
is hard to predict the influence of this factor on the market.
This uncertainty in itself was a positive factor for bond
market, however, (at least in developed markets) although this
should have been already priced in. As soon as this
uncertainty passes, downward pressure on the US bond
market is be expected, which in its turn could hurt Russian
papers. Thus we see a Russian Eurobond price decline in
coming days.