Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
2025 Market Outlook: Key January Events to Watch 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Wall Street Analysts Weigh in on Latest NFP Data 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
The Russian inflation data surprised to the downside in June, moderating from 5.1%y/y to 4.7%y/y; core inflation moderated to 4.6% from 4.7%. Some volatile food prices, for example, fruit and vegetable prices, played a role in the headline decline – but, even without this effect, inflation is indeed beginning to show signs of peaking as CBR had promised.
This will increase CBR's confidence that the VAT hike this year has really not had any lasting impact, which means that rates can be lowered further as and when the CB chooses. We expect another 25bp rate cut on 26 July.
A perspective is that this is more a reaction to ruble appreciation in recent weeks because of a dovish world outlook - CBR is reluctant to accept too rapid currency appreciation and therefore, may now front-load its rate cuts. Still, the implication of this signal is modest because analysts are unlikely to significantly revise their targets for the end of the forecast horizon, although the timing may now change. The announcement is therefore only mildly RUB-negative.
We remain MW RUB in the GBI-EM Model portfolio, but are bearishly biased, holding USDRUB call spreads. YTD the ruble has been the strongest performer in EM FX, with spot around +7.2% stronger against USD.
However, in our view risks from current levels are skewed to the downside, given expensive valuations and geopolitical uncertainties. And geopolitical concerns remain.
Geopolitical risks continue to linger, and if were to materialize, could generate bouts of capital outflow pressure. With the budget rule in place, our economist forecasts the CBR to purchase around $67bn of FX on behalf of the budget rule in 2019, from the $100bn projected current account surplus.
This does not leave a strong buffer to deal with such potential capital outflow bouts. Accordingly, (at spot reference: 63.611 levels), we advocated Aug-19 USDRUB 63/68 1x1 call spreads, we now hold the same positions as further upside risks are foreseen. Courtesy: JPM & Commerzbank
