Rates Weekly - November 23, 2021. Geopolitics Keep Weighing

> Ruble liquidity: Liquidity to recover swiftly after tax payments thanks to the Federal Treasury. On Wednesday-Thursday, the current accounts of banks at the CBR will dip to R2.5 trln due to taxes. Hence, a mild liquidity shortage will arise and O/N rates may temporarily grow to 7.6%. However, starting Friday, once banks take R1 trln in deposits from the Federal Treasury, their current accounts at the CBR will grow to R3.2 trln, which is R0.4 trln above the required level. This means that early next week O/N rates will be set to drop to 7.3% and will likely stay subdued given the approaching end of the reserves averaging period (December 7).> OFZs and rates: Geopolitics keep weighing. As could have been expected, the Finance Ministry canceled its weekly auctions this week to facilitate a stabilization of the market. Geopolitics will remain the main driver for the time being. If the negative news flow abates, the market should recover, as the current levels looks fundamentally unjustified, especially at the long end of the ruble curves. For instance, long-run forwards in swaps imply that the CBR will keep its key rate above 8%, on average, in 2023 and beyond.