RUB: Russia Seen Able to Re-Direct Aluminium Exports Despite Possible Sanctions
- The EU might ban imports of primary aluminium from Russia as early as February 24 under the latest package of sanctions approved on Wednesday, Kommersant report. The newspaper note that Russian aluminium giant Rusal will be able to redirect these exports to Asian markets, where demand is growing. Meanwhile, citing “analysts,” they say the US’ new 25% duties on aluminium and tight monetary policy in Russia pose far greater dangers for the market.
- The first OFZ bond auction after the phone call between Putin and Trump turned out to be one of the largest in the last four years, with volumes exceeding RUB 190bln, Kommersant report. The Finance Ministry also acted more rigidly than a week earlier, satisfying less than 70% of bids against the backdrop of persistent demand.
- Foreign Minister Sergei Lavrov visits South Africa for a meeting with his Group of 20 counterparts. Meanwhile, Deputy Prime Minister Alexander Novak holds a meeting on the domestic fuel market.
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GILTS: Off Early Highs, Syndication Eyed
The early uptick in gilts fades, as participants assess the mixed labour market data (soft quantity readings vs. firmer-than-expected private wages) and the latest developments in the U.S. tariff playbook.
- Futures peaked at 91.79 before fading back to ~91.60.
- Initial resistance at the January 17 high (91.96) untested.
- That leaves the bearish technical trend intact in the contract, initial support at the January 16 low (90.68).
- Yields flat to 1bp lower.
- Spread to Bunds 1bp wider at 214bp.
- The DMO has released the minutes of yesterday's consultations with gilt market participants, details available in a previous bullet.
- BoE-dated OIS showing ~63bp of cuts through year-end, matching pre-gilt open levels, 1bp more dovish on the day.
- SONIA futures flat to +2.0, back from early highs.
- On the lookout for the syndicated tap of the 4.375% Jan-40 gilt. Bookrunners have indicated this will likely be today’s business, in line with our own expectation.
RIKSBANK: Thedeen Pushes Back On Mortgage Policy Proposals
Riksbank Governor Thedeen pushed back on the proposal for more relaxed macroprudential policies in the housing market, stating that “just making it easier to borrow will not solve long-term housing market challenges”.
- The Inquiry, which was presented in November 2024, proposed a relaxation of amortisation requirements for households, an increase in the mortgage cap to 90% (from 85% currently) and a new debt-to-income cap of 550%.
- Thedeen believes “households are more resilient with amortisation requirements and mortgage caps than they would have been without them, and relaxing credit rules too much risks reversing this trend”.
- He notes that “there is a risk that the Inquiry's proposals could push up housing prices, increase household debt and make households more vulnerable to shocks.”
- Pushback against the Inquiry’s proposals was also seen in the Riksbank’s H2 ‘24 Financial Stability Report, and a recent speech by Deputy Governor Bunge.
- The Riksbank will provide a full assessment of the matter after the Government submits a proposal for consultation regarding the Inquiry’s proposals (expected in the Spring).
SILVER TECHS: Scope For Gains Near-Term
- RES 4: $34.903 - High Oct 23 and the bull trigger
- RES 3: $33.125 - High Nov 1
- RES 2: $32.338 - High Dec 12 and a key resistance
- RES 1: $30.974 - HIgh Jan 16
- PRICE: $30.490 @ 08:19 GMT Jan 21
- SUP 1: $29.509/28.748 - Low Jan 13 / Low Dec 19 and bear trigger
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
A bear cycle in Silver that started Oct 23 remains in play - for now - and recent gains appear corrective. However, the metal traded higher last week suggesting scope for a continuation near-term. An extension would expose key resistance at $32.338, the Dec 12 high. Clearance of this level would signal a reversal. On the downside, support to watch is $29.509, the Jan 13 low, and $29.748, the Dec 19 low and the bear trigger.
