OFZ market: New reality

Debt market strategy

Since the beginning of 2024, OFZ yields have increased by 300-400 bps amid escalation of inflationary risks. Yields at the far end of the curve have reached a level of 15.0-15.5%. We expect that following the CBR July meeting the rate will be increased to 18%. Under these conditions, we believe that the current OFZ yields are close to “fair” levels. At the same time, a more aggressive step to tighten monetary policy cannot be ruled out, which could lead to a greater increase in yields. Expectations that 2Q24 would become the optimal point for the reallocation of funds into fixed-coupon instruments did not materialize. At the moment, positioning in new floaters still looks most reasonable. At the same time, the yields on fixed-coupon papers already look attractive, but their purchase is justified only within a long investment horizon.