Rates Weekly - November 5, 2019

> Ruble liquidity: O/N rates to remain a bit elevated due to lack of liquidity at beginning of new averaging period. Last week, despite surging ruble liquidity, rates failed to fall sharply. A new reserves averaging period starts this week, however, and we expect a lack of liquidity to persist for some time given that the CBR has absorbed a lot and budget flows have turned out more modest than expected. We expect RUONIA to average 6.4%, or key rate minus 10 bps, above the normal level of key rate minus 20 bps.> FX liquidity: FX liquidity keeps flowing in, pushing O/N basis slightly positive. The O/N basis turned slightly positive last week due to an influx of FX liquidity. That should continue this week, keeping the basis positive.> OFZs and rates: Inflation statistics could pull rates lower this week. Over the last week, rates have consolidated after a prolonged rally in October. Tomorrow, the Finance Ministry will offer the 20y OFZ 26230 (March 2039) with no limit (R210 bln left to be auctioned). We expect R30-40 bln of the paper to be snapped up given the benign market environment. In addition, the latest inflation data could spur offers of rates as expectations of a bigger CBR cut in December rise. Finally, the CBR has started to publish a schedule of analytical publications for the upcoming month.