The ruble weakened as crude oil, Russia’s main export earner, fell. The nation’s government bonds advanced after Morgan Stanley said a U.S. budget deal favors emerging-nation debt more than currencies.
The ruble weakened 0.1 percent against Bank Rossii’s target basket of dollars and euros to 37.2425 by 6 p.m. in Moscow, when the central bank stops its market operations. The yield on the government’s February 2027 bonds declined five basis points, or 0.05 percentage point, to 7.62 percent, the lowest in two weeks.
Crude oil fell 0.7 percent to $109.81 a barrel in London. Yields on 10-year U.S. Treasury notes declined five basis points to 2.62 percent, the lowest since Oct. 3, after Congress voted yesterday to raise the U.S. debt limit, ending a government shutdown. BlackRock Inc. and Pacific Investment Management Co. said the Federal Reserve will delay paring back economic stimulus as a result of the debt-ceiling debate.
Morgan Stanley is “most constructive” on Russian, Hungarian and Mexican rates, analysts led by Rashique Rahman said in an e-mailed note. “We continue to prefer rates over FX as the removal of risk premium from fixed-income assets and a dovish Fed support emerging-markets’ bonds.”
The drop in U.S. Treasury yields supports appetite for longer-maturity Russian bonds, Sberbank CIB analysts led by Alexander Kudrin said in an e-mailed note. The spread between 15-year and five-year bonds may narrow 20 basis points to 30 basis points in the coming weeks, they said.