EMERGING MARKETS: US Hits Russia & Venezuela w/New Sanctions
POLITICAL RISK: US Hits Russia & Venezuela w/New Sanctions: The US Treasury Department's Office of Foreign Assets Control (OFAC) has published its latest list of sanctions on entities, individuals, and vessels relating to both the war in Ukraine and the political situation in Venezuela.
- Russia - Press Release - : Hydrocarbon majors Gazprom Neft and Surgutneftegas have both been hit. An earlier report from Reuters highlighted the industries and entities likely to be hit. Reuters: "The sanctions, imposed on Russia for its war in Ukraine, would cause severe disruption of Russian oil exports to its major buyers India and China,[...] Until now, hundreds of ships and many Russian oil traders have escaped the harshest U.S. sanctions as the Biden administration sought to strike a balance between the case for tighter measures and the risk of a global oil price rally."
- US Treasury Secretary Janet Yellen: "With today’s actions, we are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports.”
Venezuela - Press Release - : Senior figures including the head of state-owned oil firm PDVSA, the transport minister, and head of the state-owned airline have all been placed under sanctions. The announcement comes in the wake of President Nicolas Maduro being sworn in for a third time earlier today. The detention of opposition figurehead Maria Corina Machado on 9 Jan has raised concerns of a further crackdown on the opposition. Tighter sanctions are a very probable scenario once President-elect Donald Trump takes office.
VENZ 9.25% 2027, $17.08, -.16
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BOC WILL BE CONSDIERING FURTHER RATE CUTS
- BOC WILL BE CONSDIERING FURTHER RATE CUTS
BOC DOESN'T SEE A RECESSION, RATHER SLOW GROWTH
- BOC DOESN'T SEE A RECESSION, RATHER SLOW GROWTH
STIR: Over 30bps of Sequential Cuts Priced Into Jan and Mar '25 ECB Decisions
Although ECB-dated OIS discount less than a 5% implied probability of a 50bp cut at tomorrow’s meeting, there are over 30bps of sequential cuts priced through both the January and March 2025 gatherings.
- If a 25bp cut is delivered in line with expectations, President Lagarde will surely be asked in the press conference whether a larger move was discussed.
- Her response (alongside the general tone of the policy statement/press conference) will be key to the market reaction at the front end of the EUR curve.
- There are ~156bps of easing priced through the end of next year (vs 154bps this morning), with this afternoon's US CPI report driving a light dovish reaction in global rates.
- Euribor futures are flat to +2.0 ticks through the blues, with the "hawkish" 50bp cut from the BoC countering some of the US CPI-driven reaction.
- MNI’s ECB preview is here.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Dec-24 | 2.907 | -25.7 |
| Jan-25 | 2.590 | -57.4 |
| Mar-25 | 2.253 | -91.1 |
| Apr-25 | 1.999 | -116.5 |
| Jun-25 | 1.826 | -133.8 |
| Jul-25 | 1.734 | -143.0 |
| Sep-25 | 1.668 | -149.6 |
| Oct-25 | 1.636 | -152.8 |
| Dec-25 | 1.608 | -155.6 |
| Source: MNI/Bloomberg. | ||
