Rates Weekly - February 15, 2022. Finance Ministry Cancels OFZ Auction for First Time since January

> Ruble liquidity: Liquidity balance likely to remain in a persistent structural deficit. On Tuesday, the CBR held a 1w deposit auction. Of the R2.1 trln limit set by the CBR, only R1.48 trln was utilized. However, that was R242 bln more than the week before, so the net effect on liquidity will be negative. On top of that, the CBR expects budget flows to be a drain on liquidity for the upcoming week, with R140 bln likely to be absorbed. Taking that into account, it is unlikely that O/N rates will decline from current levels during the week. We expect them to stay near the key rate.> OFZs and rates: Finance Ministry cancels auction for first time since January. The Finance Ministry has decided to cancel its weekly auction due to the increased volatility in markets, which should help ease the pressure on OFZs. It would also help if the ruble is able to hold on to its current range of USD/RUB 75-76. With that being said, we don't see much room for OFZ yields to tighten from here, as internationals could take advantage of any rebounds in the market to further reduce their positions in light of the persisting geopolitical uncertainty. Meanwhile, local demand could be limited due to the high probability of another 100 bp rate hike in March, which we believe is priced in by the swap market but not the OFZ market.