Bi-Weekly FICC Strategy - September 23, 2021. Fed Rhetoric Remains Market-Friendly

> Oil: We think late September-early October would be as good a time as any for Brent to test its YTD high of $77.8/bbl.> Ruble: This week's FOMC meeting failed to spook the markets, despite higher interest rate forecasts. The markets appear to be more focused on the short-term economic picture, which remains rather cloudy due to the Delta strain. Should economic data disappoint, investors may count on Fed caution and the greenback weakening globally. As long as geopolitical risks are contained, we see the ruble reaching 72 by the end of September, supported by exporters.> OFZs and ruble rates: We stick to our recommendation to buy the new 10y OFZ 26239 (July 2031). This week, the Finance Ministry cut the auction offer volume to just R15 bln and cut the duration, which we consider to be a reassuring sign for long-dated OFZs, since it demonstrates the ministry's increasing priority of pricing terms over placement volumes.> EM bonds: Although the inflow into EM bonds continued over the last two weeks, spreads widened - by 9 bps, 20 bps and 40 bps in the single-B, double-B and triple-B categories. We expect spreads to consolidate near the current levels in the next couple of weeks amid a further modest inflow into the space.> FSU sovereign Eurobonds: We think that all of the factors that have been supporting Russian sovereign Eurobonds recently are still in place, which bodes well for their further outperformance. We still like the Kazakhstan 45 and the Belarus 26 and 27. > FSU corporate and banking Eurobonds: Russian Eurobonds have generally exhibited weakness over the past two weeks, though Gazprom papers have again proved the exception. Banking bonds were mixed over the last two weeks. While yields on most quasi-sovereign bank issues did not move much at all, yields on the bonds of private banks showed sharper moves amid the resumption of activity in the primary market.> FSU primary Eurobond market: Activity in the primary market remains elevated.