Daily Market Monitor: We believe that global news will continue to determine the dynamics of Russian assets in the coming days

The dynamic on the rouble bond market on Tuesday would
best be described as static. A lack of ideas, loaded books and
a relatively stable environment ensured traders had little
desire to buy or to sell. We see the situation as remaining the
same in coming days, although upcoming issues – LUKoil’s
Rub 6 bln and Baltika’s Rub 1 bln on November 23 – could
bring new blood to the market.

The Russian Eurobond market was also extremely quiet on
Tuesday. The sovereign spread marginally increased by 1 bps
while remaining at the relatively low level of 231bps. The
Russia’30 yield increased by 2 bps to 6.71% punctually
following the benchmark UST’10 yield, which also increased 2
bps to reach 4.21bps. We believe that global news will
continue to determine the dynamics of Russian assets in the
coming days. On the benchmark side, a new set of US
economic indicators is expected Wednesday: October CPI
inflation, Industrial Production and Capacity Utilization. As
for mid-term prospects, the recent strengthening of “hawkish”
forces in president Bush’s US administration could influence
the market: more spending on security and antiterrorist war
could have negative implications the US state deficit and the
dollar.