Stocks Surge With Bonds on Troop Pullback: Russia Reality Check

As markets react in real time to Russia’s incursion into Crimea and the annexation of the Black Sea peninsula, stocks and bonds jumped the most in seven weeks after President Vladimir Putin said he pulled back troops from Ukraine’s border.

The Micex Index rallied 3.4 percent to 1,363.48, cutting its drop since Putin’s intervention in Crimea started on March 1 to 5.6 percent. Separatists in Ukraine’s south and east should postpone planned May 11 plebiscites over regional autonomy to help “create the necessary conditions for dialogue” with the government in Kiev, Putin said today. The chart shows the performance of stocks, bonds and the ruble, along with indicators of Russian investment risk.

The yield on ruble-denominated bonds due February 2027 fell 33 basis points to 9.14 percent, paring its increase since Feb. 28 to 78 basis points. The ruble jumped 1.3 percent to 34.9410 per dollar, taking its gain in the period to 2.7 percent.

The top panel displays the value of the Micex Index of 50 Russian equities, government debt in the Bloomberg Russia Local Sovereign Bond Index, and the ruble relative to the dollar. Credit default swap rates on Russian bonds due in five years appear in the bottom panel. The yield gap between Russian debt and U.S. Treasuries and the one-month implied volatility of the ruble are also tracked.

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