Bi-Weekly FICC Strategy - December 1, 2021. Fed Turns More Hawkish

> Oil: Market players are now increasingly expecting OPEC+ to cut production in January instead of simply pausing the ongoing output hikes in order to mitigate the SPR releases and combat the possible demand losses. Such a decision would certainly help shore up sentiment and prices, although in our view a one-month pause in January is still the most likely outcome from this week's meeting.> Ruble: The ruble has recovered in recent days as another Putin-Biden summit may be held before the year-end and could reduce the geopolitical tension, like in April-June. Ahead of the summit, we see the ruble firming to 73, and we think it could push on to 72 after the meeting and into the year-end.> OFZs and ruble rates: We see no reason to expect the CBR to speed up the pace of rate hikes beyond the 75 bps delivered in October, whereas the swap markets are pricing 90 bps. However, we do not see this as a compelling moment to enter receivers in front-end rates.> EM bonds: Spreads of EM bonds could continue grinding higher after the Fed mentioned the possibility of faster QE tapering, which will be discussed at the next Fed meeting this month.> FSU sovereign Eurobonds: The shifting global market backdrop amid the new coronavirus strain drove yields across CIS sovereign curves up 20-30 bps depending on the rating. Fundamental factors have not changed significantly, however, and we maintain our views on the credit quality of the sovereigns. > FSU corporate and banking Eurobonds: Market conditions are likely to remain challenging in the very near future amid persisting concerns over the Omicron variant and increasingly hawkish language from the Fed.