Bank of Russia Hawks Claim Victory as Curve Inversion Shrinks
- Gap between 2- and 10-year bonds is narrowest since April
- Nabiullina dismissed bets on ‘lavish’ easing at last meeting
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The Bank of Russia’s hawkish message last month may have been quickly drowned out by the U.S. Federal Reserve and OPEC, but there are signs Governor Elvira Nabiullina’s words got through.
By dismissing hopes for a “lavish” easing cycle, Nabiullina sought to reduce Russia’s so-called yield curve inversion, when rates on long-maturity bonds are lower than on short-term debt, pointing to economic weakness. Yields climbed for three days after her statement before tumbling as the Fed spurred appetite for emerging-market assets and the Organization of Petroleum Exporting Countries announced a deal to cut output, boosting the outlook for Russia, the world’s biggest energy exporter.