RUB appreciation continued to buoy the OFZ market yesterday, but the price action was much more moderate than RUB’s performance. The belly opened flat, while the long end enjoyed a stronger bid, rising 0.1-0.3pp in price. Overall, demand continued to be concentrated in long tenors, pushing yields down 10bp to 11.2%. In the meantime, the belly and the front end narrowed only 3-6bp, so the curve became more hump-shaped, with the 5s10s spread reaching -25bp. The results of the OFZ auctions were mixed. Given the moderate supply of bullet OFZs recently, demand for RFLB 23 was decent, with the bid-to-offer being close to 3.0x. The Ministry of Finance placed the whole volume of RUB 7.8bn at an average yield of 11.36%, in line with secondary market valuations. At the same time, bids for floater RFLB 17 covered only half of the offer, but MinFin still decided to provide no premium, placing only RUB 2.8bn at an average price of 101.64.