Asian Stocks Surge as Oil Prices Fall and Strong US Dollar Weighs on Markets 
German Industry Employment Falls to Lowest Level in a Decade 
Oil Prices Drop as U.S.-Iran Peace Deal Eases Supply Concerns 
Gold Prices Slide as Hawkish Fed and Strong Dollar Weigh on Bullion 
Oil Prices Steady as U.S.-Iran Truce Uncertainty and Middle East Tensions Keep Markets on Edge 
Asian Currencies Stabilize as Dollar Holds Near Two-Month High After Fed Hawkish Signal 
US Stock Futures Jump on Reports of Preliminary US-Iran Peace Deal Despite Fed’s Hawkish Outlook 
Asian Stocks Advance as Nikkei Nears Record High Ahead of Fed Decision 
Italy’s Economy Outpaces Eurozone Peers as Investment Spending Fuels Growth 
US Stock Futures Slip After Wall Street Rally Fueled by US-Iran Deal and Chipmaker Surge 
German Auto Suppliers Turn Bearish as Investment and Jobs Shift Overseas 
Oil Prices Ease as Markets Weigh U.S.-Iran Peace Deal and Strait of Hormuz Reopening 
BOJ Signals More Rate Hikes as Inflation Risks Rise Amid Energy Price Pressures 
Australia Eases Capital Gains Tax Reforms to Support Small Businesses and Startups 
Japan Inflation Stays Below BOJ Target Despite Rate Hike and Rising Energy Cost Risks 
Oil Prices Slide as U.S.-Iran Deal and Hormuz Reopening Ease Supply Concerns 
Gold Prices Rebound on U.S.-Iran Peace Deal Optimism Despite Fed Rate Hike Signals 
Russian macroeconomic conditions have soured again just as the Bank of Russia (CBR) approaches a rate decision on Friday 11 December. It is a familiar sequence of events. Global oil prices have declined to new lows, causing RUB depreciation and raising concerns about the possibility of an additional round of pass-through pushing inflation higher. Other factors that will push inflation higher, are the sanctions Russia placed on imports of fruits and vegetables from Turkey and possible administrative obstacles to other Turkish imports. It is beleved the CBR will keep its 11% key rate on hold at this meeting, delaying the beginning of cuts until the January or March meetings. The split consensus leans towards a CBR hold in December.
Russia inflation has disappointed in Q4. After having dropping to just 0.35% m/m in August, monthly inflation increased for three consecutive months reaching 0.80% m/m in November, an annualised rate of 10%. Headline inflation remains elevated at 15% y/y in November.
"We expect December inflation to decline to 13.0% y/y due to base effects. This is the upper range of the CBR forecast (12-13%) made in September. Following this, we expect steep declines in headline inflation in Q1 16 as base effects become even more powerful. However, monthly inflation could remain elevated due to recent RUB depreciation",says Barclays.
Overall, it is too soon for the CBR to reinitiate rate cuts, in our view. Instead, before cutting its key rate, the CBR should wait until headline inflation drops and the run rate of inflation slows considerably. In our opinion, sustained monthly inflation of 0.5-0.6% m/m would be sufficient to justify cutting. This will be possible if global oil prices stabilise (or rise), thus facilitating RUB stabilization.
"We expect the CBR to begin cutting rates in 50bp increments at either the January or March rate-setting meetings. We expect that the CBR will continue cutting over four meetings for cumulative 200bp to 9%. At this time, we think the risks are skewed towards adverse inflation developments and further delay cuts from possible negative political or economic developments", added Barclays.
