Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 15 Oct 2026 by Evgeny Gavrilenkov

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The sentiment on the local financial markets improved after Mr. Trump announced the “diesel deal” last Friday. Many investors hope that it could be the first step to resume peace negotiations. As a result, bond and equity prices went up. However, the fixed income market saw a limited bounce effect due to high inflation prints released by Rosstat. Inflation YTD soared above 6% last week (not least due to regulated tariffs hike). Notably, the CBR previously anticipated inflation to stay between 6% and 7% this year but it will likely be higher already in November. The BoD meeting will likely revise its 2026 inflation outlook. Markets expect the key rate to go up, and investors remain reluctant to increase their OFZ holdings. Minfin reported a budget surplus of R609 billion in September, with the YTD deficit shrinking to R5.2 trillion. With strong oil prices, the full-year deficit is expected to be smaller than planned, along with reduced issuance of OFZs. This could prevent yields from going too high, especially if later the CBR softens its rhetoric. Additionally, the government is likely to ramp up FX purchases in November and December under the fiscal rule, given sustained high oil prices, which may slightly weaken the ruble. Furthermore, as the oil cut-off price drops from $59 per barrel to $50 starting January 1, this trend may carry into next year. In the seven days ending October 12, inflation slowed w-o-w to 0.11%, but MTD inflation had already topped 1.0%. YTD inflation rose to 6.1% on that day, while cumulative inflation for the first ten months of 2025 stood at 4.81%. This year, inflation has been not only higher but also more volatile, making it harder to predi...