Debt Markets Today - June 3, 2021. Strong Auction for 10y OFZ; Russian Weekly Inflation Comes In a Touch Lower

CIS EUROBOND MARKETRussian sovereign Eurobonds traded sideways yesterday, and market activity dipped again. Nevertheless, the euro-denominated sovereigns saw elevated interest.GOVERNMENT DEBTThe strong auction results in the 10y bond, along with some fairly hawkish commentary out of the CBR, caused the OFZ curve to continue to flatten yesterday. Demand at yesterday's auction for 4y nominal paper was 1.4 times the amount offered, while bids for the 10y auction were 4.1 times the offered volume. In a report published yesterday, the CBR projected that inflation would not enter a sustained downtrend until the fall. Against this backdrop, short-dated OFZs added 2-6 bps in yield, while yields on medium-dated issues edged up 1-2 bps. Long-term papers, on the other hand, slipped 1 bp in yield. Trading volumes surged to R42 bln yesterday (around 2.5 times the average for the month), with the issues offered up at the auctions accounting for roughly half of this amount. We expect ruble rate curves to exhibit a similar dynamic over the coming weeks.STORIES> Russian weekly inflation slows to 0.1%> Bi-Weekly FICC Strategy> Auction for 10y OFZ sees stronger demand than for 4y OFZ