CEMEA Rates Snapshot: Price Action Subdued as the FOMC Approaches

Rates are relatively quiet in the lead-up to the FOMC meeting – with markets focused intently on taper timelines and the dot plot distribution. Expectations seem to be coalescing around an expectation for a November taper, while concerns surrounding a more hawkish dot plot distribution in the 2022/23 median for lift-off and newly released 2024 projection bring risks of a near-term readjustment for global rates markets. CEMEA rates are treading water pre-decision, with the exception of Turkish USD bonds which continue to underperform.

• SA: SAGBs trade marginally bear flatter on the day following a high, but in-line, headline CPI print at 4.9% y/y vs 4.6% prior. 2Y yields trade +1.4bp higher, holding above the 5.00 handle. The 10-30Y section of the curve is fluctuating +/- 1bp around the open. High-beta SAGBs remain among the most vulnerable to rising UST yields and risk off owing to their high-beta status.
• TURKEY: TurkGBs trade broadly mixed today with the curve positioned bear steeper. 2Y yields -2bp lower widening the 2s10s spread with the 10Y currently holding +6bp higher. USD bonds continue to haemorrhage across the curve with weakness concentrated in 7-10Y yields +6.5-8bp as the CBRT meeting approaches.
• RUSSIA: OFZs trade mostly muted on the day with the exception of the 15Y tenor at -3bp lower, having pulled back from 7.40 resistance. Weekly CPI data will be eyed closely this afternoon for signs of moderation in price pressures. Similarly, Russian USD bonds trade mixed: 2Y +1.9bp, 5Y -1.6bp.