| LONDON, April 21
LONDON, April 21 Russian 10-year bond yields
fell to three-year lows on Friday on expectations of a rate cut,
although the rouble along with most other emerging assets was
flat to weaker as the dollar and U.S. yields held off recent
The first round of French presidential elections this
weekend has fuelled market jitters, even though far-right,
anti-euro candidate Marine Le Pen is seen as unlikely to win the
second and final round in May.
A rally in emerging markets has also been checked by
tensions around Syria and North Korea, as well as worries over
the policies of U.S. President Donald Trump, who has launched a
probe against China and other steel exporters.
MSCI's emerging equity index rose 0.3 percent, but
data from JPMorgan showed slowing inflows into emerging market
funds, with equity and bond funds receiving $650 million and
$1.3 billion respectively in the past week.
Chinese mainland shares posted their worst week of 2017 on
fears of greater regulator scrutiny. Asian steelmakers' shares,
however, shrugged off Trump's trade threats.
Most emerging currencies were flat to weaker against the
dollar, but looked poised to end the week stronger.
South Africa's rand was set for its second week of gains
after sharp falls in the two preceding weeks following a credit
rating downgrade to junk. South African local yields
touched a three-week low after data showed slowing inflation
Turkey's lira firmed more than two percent this week
after President Tayyip Erdogan won last weekend's referendum on
awarding him greater powers.
The Russian rouble only strengthened a slither over the week
but is likely to gain support from bond market flows.
Ten-year bond yields tumbled to 7.79 percent, the lowest
since January 2014 and down 15 basis points this week, after
central bank chief Elvira Nabiullina said a 25-50 bps rate cut
was possible next week. One-and two-year yields too
fell, touching 12-week lows, according to Reuters data.
Falling interest rates have enticed foreign players too -
Wednesday's auction saw bids of 74 billion roubles for 20
billion roubles in 15-year bonds
Maxim Korovin an analyst at VTB Capital said that after
easily absorbing Wednesday's auction volumes, investors had
turned to secondary markets, with many trying to re-invest the
150 billion worth of rouble debt that matured this week.
"Initially OFZs were led by the local interest, but in the
afternoon fast international money joined the rally, pushing
(price) quotes even further north," Korovin told clients.
Per Hammarlund, chief emerging markets analyst at SEB in
Stockholm, noted the rouble's strength despite oil's large
weekly price drop and said end-month tax payment would continue
to support it. The currency is up 4 percent this month.
"Part of the reason why yields have come down is the central
bank, but also people bringing in money early to pay taxes, and
they have to put it somewhere," he said.
Central European currencies saw some pressure from French
election jitters, with the Polish zloty near one-month lows
and the Czech crown standing just off the 27-per-euro
floor that was scrapped earlier this month.
"We are seeing a bit of a soft period in central and eastern
Europe, even the Czech crown touched the previous floor. Many,
including me, believed it would drop down to the low 26s maybe
high 25s (against the euro) - it is partly related to the French
elections," Hammarlund said.
For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
Emerging Markets Prices from Reuters
Equities Latest Net Chg % Chg % Chg
Emrg Mkt Indx 962.33 +3.88 +0.40 +11.60
Czech Rep 979.20 +4.01 +0.41 +6.25
Poland 2293.16 +7.34 +0.32 +17.72
Hungary 33012.74 +57.72 +0.18 +3.15
Romania 8220.91 +11.25 +0.14 +16.03
Greece 675.60 +1.20 +0.18 +4.97
Russia 1086.41 +3.06 +0.28 -5.72
South Africa 45726.24 -9.33 -0.02 +4.16
Turkey 92726.99 +687.61 +0.75 +18.67
China 3173.15 +1.05 +0.03 +2.24
India 29333.66 -88.73 -0.30 +10.17
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.96 26.88 -0.28 +0.19
Poland 4.27 4.26 -0.12 +3.14
Hungary 313.17 313.26 +0.03 -1.39
Romania 4.54 4.54 -0.06 -0.15
Serbia 123.42 123.48 +0.05 -0.06
Russia 56.29 56.16 -0.24 +8.83
Kazakhstan 312.49 312.71 +0.07 +6.77
Ukraine 26.72 26.73 +0.04 +1.05
South Africa 13.14 13.14 -0.03 +4.47
Kenya 103.15 103.30 +0.15 -0.76
Israel 3.68 3.67 -0.25 +4.69
Turkey 3.64 3.64 -0.11 -3.23
China 6.88 6.88 -0.01 +0.90
India 64.61 64.61 +0.01 +5.17
Brazil 3.15 3.15 +0.03 +3.36
Mexico 18.83 18.78 -0.26 +10.00
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 333 0 .02 7 76.96 1
All data taken from Reuters at 08:19 GMT. Currency percent
change calculated from the daily U.S. close at 2130 GMT.
(Additional reporting by Karin Strohecker; editing by Alexander