CBR moratorium on Russian securities transactions for foreign individuals and legal entities will kick in today. This ban followed restrictions on the sale of securities on behalf of non-residents. These and other CBR restrictions are aimed at limiting the outflow of capital from Russia. Russian residents are now banned from transferring foreign currency to their accounts in foreign banks and other financial market organizations. Russian exporters were ordered to sell 80% of foreign exchange earnings. MICEX is closed today and RUBUSD is currently trading at 98-102 after hitting a historic low of 110. The meeting between officials from Russia and Ukraine ended on Monday. Both sides noted that there are issues that still need to be addressed. The parties should hold another round of negotiations in the next few days.
A somewhat respite in the price volatility caused by the Russia/ Ukraine crisis and sanctions imposed by the west sent stocks northwards. S&P 500 futures rose by 0.2%, Nasdaq 100 futures went up 0.1% while Nasdaq 100 rose 0.3%. Crude oil prices surged as traders weighed the possibility of a release of stockpiles against concerns over disruption to energy exports from Russia. WTI was at $97.25 per barrel, up 1.6%. The haven gold price rose to $1,913.70, up 0.7%. At the same time, 10-year Treasuries yield rose three basis points to 1.86% after dropping during the last market session on risk aversion. The move by the US and its allies to block the Bank of Russia’s access to foreign reserves and cut some lenders off from SWIFT has continued to put Russia’s markets under pressure. Lenders globally are currently making it difficult to finance transactions related to Russian resources. Atlanta Fed President Raphael Bostic, who does not vote on monetary policy this year, said he favours raising rates by 25 basis points in March and would consider a half-point move if inflation does not decline. We expect data on U.S. unemployment, nonfarm payrolls on Friday.
Bunds continued firmer after shedding about 10bps from Friday’s close to end Monday at 0.135%; benchmark 10Ys were trading 0.121% at 08.00 GMT. Peripherals also continue firmer with 10Y BTPs having shed 12bps on Monday to close about 1.628%; the same were trading 1.600% at 08.00GMT. Equities open subdued having closed in the red on Monday with the Stoxx 600 just about flat at 0.05% up at 08.15 GMT. On the data front we have German and Italian CPI for February as well as well Eurozone February manufacturing PMIs.
Kenya’s annual inflation has slowed to a 16-month low in February on easing food and electricity prices. A year ago, consumer prices did rise 5.1% from the previous year compared with the 5.4% we saw in January. Coming into 2022, inflation has been one of the major indicators in the nation’s economy that the Kenya’s central bank had planned to keep within a range of 2.5% to 7.5%. With upsides risks to the outlook and worries over living cost, the central bank may just be encouraged to hike its key interest rate at its March 29th monetary policy meeting. East Africa’s largest economy is facing upward price pressures from the continued depreciation of its currency that’s driving up import costs, a surge in food prices fuelled by a drought in the north and Russia’s invasion of Ukraine which caused oil to jump to a 2014-high. Yields in their sovereign space have also not been spared from the recent volatility experienced like their other counterparts (NGERIA, ANGOLA, GHANA) brought about by the tensions between Russia & Ukraine. Yields on short end of their curve (KENINT 6 ⅞ 06/24/2024 REGS Corp) on Thursday hit 5.26% levels after opening at 4.5% that day before eventually closing at 5.00% levels (with the rally on Friday).