Yesterday, the OFZ market opened on a stronger footing, but gains faded quickly. The long end saw the greatest pressure, as prices here declined almost 1.0pp. In particular, RFLB 28 widened to 12.37% in yield, while RFLB 27 lost 0.9pp, price-wise, and closed at a yield of 12.31%. On the belly, bonds slipped 0.3-0.4pp in price terms. However, the front end even enjoyed some bids, so at the end of the day the curve had steepened: the long end moved up 20bp in yield, while the front end was down 10bp. Hence, the 2s10s spread narrowed to -110bp, from -135bp the day before. As we highlighted on Monday, the OFZ curve looks too flat compared with EM peers, so we expect further steepening. On the other hand, it looks like the Ministry of Finance is reluctant to increase the new supply of long debt significantly with bullet bonds, which could sustain the flat curve for quite a while. At today’s auction, MinFin is to offer RUB 5bn of RFLB 19 6.70. Meanwhile, MinFin continues actively supplying the FRNs; today, it is offering RUB 15bn of RUONIA-linked RFLB 17. The bond traded near 94.80pp this week, while last week it was auctioned at 94.05pp of par. We think demand would cover the whole offering size today as the bond looks undervalued, in our view.