Yesterday, the Ministry of Finance conducted two OFZ auctions, placing the offered RUB 16.2bn in full. Each of the auctions saw solid demand, with bid-to-cover in RFLB17 amounting to 4.7x and 5.5x in RFLB23. Thus, MinFin offered no premium to the secondary market, as the average yield printed 13.37% in the floater and 12.37% in the bullet paper.
After the auctions, investors vigorously chased OFZ in the secondary market, pushing the curve down close to the 12.00% yield level. The long end surged 2.1-2.6pp in price, the belly was up 1.8-2.2pp, while short tenors closed 1.0-1.3pp in the black. Subsequently, the 2s10s OFZ spread turned positive (closed at 6bp), so the curve is not inverted anymore. The strong performance from the FX spot market is pushing the consensus outlook regarding future monetary policy towards earlier and more aggressive cuts, in our view.