Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 16 Apr 2026 by Evgeny Gavrilenkov

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The OFZ market remained under pressure in the past two weeks. Some acceleration on inflation (to 0.17-0.19% w-o-w at the very end of March and early April) made investors cautious regarding potential reaction from the CBR. Additionally, the regulator's top management acknowledged that they continued to closely monitor the situation in the Middle East. The market treated it as a signal for potential change in rhetoric and forward guidance. As a result, the 10Y OFZ yield increased by 10-15 bps and surpassed the maximum deposit rate (among the top 10 commercial banks), a first since 2023. Positive carry for long-term bonds versus money market rates may spark demand from the banks, but the situation will largely depend on the CBR decision and expected comment on Friday next week in the aftermath of its BoD meeting. However, the most recent weekly inflation print (0% w-o-w) should support the demand for OFZs. The ruble has appreciated by 7% since the start of the month. Minfin's decision to refrain from FX operations (stipulated by the fiscal rule) until July 1, combined with the increased inflows of FX from exporters amid soaring oil prices, shifted the supply/demand balance in favor of the former. This effect seems to be temporary, and the balance will likely somehow change in June-July as the government is expected to start purchasing FX for the National Wealth Fund. All in all, FX market volatility will likely stay elevated in the coming months. As in the seven days ending on April 13, the inflation print was 0.00% w-o-w, the MTD and YTD inflation remained unchanged (0.17% and 3.15%). As the ruble appreciated, it trimmed import prices. Hence, weekly inflation may remain...