RUSSIA: Kremlin Spox Delivers Mixed Messages On Outcome Of Putin-Witkoff Talks
Reuters reporting comments from Kremlin spox Dmitry Peskov in which he appears to rule out any swift Ukraine peace deal, but also claim progress has been made. Says Ukraine peace plan talks "have a better chance of being productive if they are carried out without public commentary". Peskov repeats previous comments that Russia does not favour "megaphone diplomacy" [notable given President Vladimir Putin's very public sabre-rattling comments on 2 Dec].
- Following the meeting between Putin, US presidential envoy Steve Witkoff and President Donald Trump's son-in-law, Jared Kushner, in which the US delegation put forward the 20-point agreement reached between US and Ukrainian officials in recent days, Peskov says "some things were accepted, others rejected as unacceptable in what was a normal working process".
- Peskov: "It would be wrong to say that Putin rejected the US plan on Ukraine. It was a first exchange of opinions". Says that he hopes the US does not view it as a rejection. The results of yesterday's talks "should be the basis for a high-level conversation between Russia and the US", adding Russia "...is ready to meet with the US as many times as needed to reach a resolution on Ukraine."
- The latter comments, which also praised Trump's efforts in flattering terms, continue the Kremlin's efforts to engineer another in-person meeting between Trump and Putin, and to sideline Kyiv from any negotiations.
- Numerous and lengthy negotiations will do little damage to Russia's war effort amid sustained gains along the frontline, and it is in a position to significantly threaten Ukraine's energy infrastructure over the course of the country's brutal winter.
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MNI: UK OCT FINAL MANUF PMI 49.7 (49.6 FLASH, 46.2 SEP)
- MNI: UK OCT FINAL MANUF PMI 49.7 (49.6 FLASH, 46.2 SEP)
GILTS: Sell-Side Holds Neutral To Bullish View On Gilts
The latest round of weekly sell-side reports that we have read points to a neutral to bullish view when it comes to gilts:
- Bank of America: We retain a bullish tactical bullish bias.
- Goldman Sachs: Recent outperformance can extend and we lower our 10-Year forecasts to 4.25% at end-2025 (from 4.40%) and 4.00% at end-2026 (from 4.25%). The main driver of outperformance is ongoing disinflation, which should calm long-end risk premium and allow the BoE to cut below market pricing. The upcoming Budget should also help sustain modestly lower yields. There should only be modest revisions to near-term supply, whereas the required fiscal tightening measures should weigh on growth and inflation. Most importantly, the scale of the budget adjustment will likely mean the UK government adopt a more credible set of deficit-reduction measures, which should improve the market’s view of the fiscal outlook. The DMO is also likely to keep WAM relatively low, although we do not expect further skew away from long-end issuance allocation.
- TD Securities: We expect 10s to remain within the 4.30-4.50% range near term. A push lower would require substantive shifts in the BoE’s rhetoric at the November meeting. Our year-end forecast for Gilts remains at 4.40%. Steepening bias on the curve has been losing momentum globally. Our expectations of lower duration supply makes us favour 5s30s gilt flatterers.
BONDS: Off Lows As Oil Falls From Highs
Little in the way of headline flow to really explain the recovery from lows in wider core global FI markets over the last hour or so, with the move coinciding with some weakness in crude oil and a bid in the broader USD.
