Russian government and corporate bonds are default.Russia is bankrupt. Russian government and corporate bonds are default.
RGBI trade ideas
RGBI will go up in long-termIn short-term will go down to the levels of 115-118 and after that will go up
Russian government and corporate bonds about to default.Before the war Russian reserves amounted to 630 billion USD, a conservative estimate puts them to this date @ around 500 billion USD. Every day that the war lingers on, costs russias coffers 15 to 20 billion USD. This is not considering the additional sanctions and exclusion from the banking system slapped on Russia this weekend. Following the debacle of the Russian army in the Kharkiv region and the complete surrender of their troops in this region, Putin ordered to ramp up the use of heavy equipment and to send more troops and equipment to try and conquer the city. This will considerably increase the cost of the war for Russia. Also, this debacle is likely to trigger a wave of cancellations of orders for Russian military hardware, which has proven its self ineffective, specially after the downing of a SU35 (Russias top fighter jet) by a Ukranian SU22. Russia, home to 140 million needs 200 billion USD to ensure the population doesn't starve. At this rate, they will reach this threshold within 10 days, absent of a victory. Also, must be noted that a political victory is now impossible for Russia which was its primary objective for starting this war. Tomorrow the markets will open and within a few days the future of Russia will be decided by its ability to raise cash. The charts suggest these are out of the window and hedge funds may be placing their bets on a total Russian default.
Correction in Russian local sovs not yet implemented in corpsAs usual, Russian local corp bonds are less sensitive to momentum than sovs (OFZ). On price charts you can see that in spite of correction in OFZ corp index moved less. Investors should be more careful in local corps selection paying more attention to spread values.
The RGBI index still has room for falling!Technically. Immediate support on the monthly timeframe is in the 134.85-131.60 zone. The long-term uptrend has been broken. You need to be patient and wait for the exodus of investors from this asset to stop and the cycle of accumulation begins.
Fundamental. By the end of October, annual inflation is expected in the range of 8-8.2%. If prices continue to grow at this rate and further, in November inflation will already be 8.6%
The key rate of the Central Bank of the Russian Federation is now 7.5%, which is significantly lower than inflation. It is likely that at the next meeting it will be raised not even by 50 basis points, but by 75-100. The fall in the RGBI index may continue by another 10 percent or more. We wait!
Bearish look at Bears' Bond MarketRecently foreign investors have started to enter Russian market according to data posted on 28 oct 2020. Hence there is high probability of pullback to S1 level.
However, I see limited ability of RUS bond market to recovery as many things bring uncertainty to the world.
Entrance Wedge on RGBI , the beginnig of bear marketRGBI has completed to draw wedge , that , as a rule, is first wave of new big trend.
Reverse of russian debt marketI consider that Russian debt market has reversed, since almost all waves suits to proportional rules and RGBI has just formed entrance wedge that point out to the beginning of bear market. Without any doubts it will effect to Russian RUB that might devalue substantially.
.../RUB ForecastEMA and RSI are ready for fly
However, the graph is showing gib formation
My personal opinion is that foreigners should be aware of Russland market.
RGBI 4-th wave there is great probability that now RGBI is depicting 4-th wave of the biggest order , that lead to sharp devaluation of Russian RUB . So USD/RUB long in short term.
RGBI new Maximum , Update of last forecast We consider , that there are two possible ways of development current situation . Either RGBI is ready to draw 4 purple wave or it will occur when RGBI will achieve 150.60 approximately. According to gold ratio second variant is more probable however at the moment yellow 1 and yellow 5 wave are equal in absolute term that also might be considered as good ratio of waves.
Final growth of russian state debt market , carry trade bubblewe think that now russian state debt market is in final stage of its growth. It is obvious fact that it will lead to strengthen of Russian ruble or ruble will be stable relatively.
USD/RUB Strengthen of Russian RUB At the moment, the key factor determining the dynamics of the Russian currency is the inflow and outflow of money in Russian bonds. The current rubble appreciation is associated with a new influx of non-residents in GOV Bonds. Wave analysis of Eliot showed that at the moment we are drawing A to ABC (B is of a higher order), which means that the rubble will gradually strengthen. The correlation between RGBI and RUB / USD is more than 90%, making up a dependency model and substituting the potential values of the RUB / USD index, it received that the rubble could reach 61-62 rubbles per dollar. The fact that the wave in wave A 5 turned out to be stretched is indicated by the analysis of relations. According to Eliot, in the case of a stretched fifth wave, the motion ratio is (1 + 3) / 5 = either 1/1, or 0.618, or 1.618, in this case the ratio is a drop (1 + 3) wave = -4.6%, and a drop in 5 wave -7.6%, so 7.6 / 4.6 = 1.602, 4.6 / 7.6 = 0.605, which is close to the golden ratio.
RGBI - looking for further decline PA to 124/5 by mid-Feb 2019Going to the next bearish station at 124/5 by mid-Feb 2019 as it shown
