Bi-Weekly FICC Strategy - June 17, 2021. Improving Geopolitical Backdrop and Rising Oil Supportive for Russian Assets

> Ruble: Following the Putin-Biden meeting, the geopolitical situation could be set to improve. This could shield the ruble from global dollar strength and help it to recover to 72.> OFZs and ruble rates: We think volatility in the ruble rates space should moderate over the next two weeks, as the market has already markedly repriced recently. Weekly inflation releases will be key in determining further direction. In recent weeks, weekly inflation has remained stubbornly high at 0.1-0.2%. Should it remain elevated, we would expect the rates curves to continue flattening.> EM bonds: The latest FOMC dot plot triggered a sharp rise in UST yields. We see the US 10y yield now consolidating near 1.60% and possibly reaching as high as 1.70%. Overall, in the wake of the Fed decision inflows should slow, but we do not see a sharp widening of spreads.> FSU sovereign Eurobonds: We suggest buying the Russia 47 versus dollar swaps given the benign geopolitical backdrop, the near record high steepness of the curve in terms of Z-spread and underperformance at the back end of the Russian sovereign curve versus EM peers. > FSU corporate and banking Eurobonds: We think that demand for higher yielding paper will remain in place and prefer Alfa Bank's T2 subs across Russian banking paper in this environment.> FSU primary Eurobond market: We expect the market backdrop to remain generally favorable through the end of June, so it is likely we will see some more activity in the primary segment in the coming weeks.