Thread by @Prune602

‼️ The OFZ Federal Bond Thread: Russia’s Race to Secure A Loan!

Q4 Auction Day 5 of 13

Part 1

Now with a new even higher KEY RATE!

(Don’t forget to use your bookmark)

Here is the Table of Contents.

https://twitter.com/prune602/status/1852111359103660166

Here is last week’s thread. It was a short one because both auctions were declared invalid.

https://twitter.com/prune602/status/1849945748453929395

I do want to point out that I provided an update to it. When an auction is declared invalid, there is a delay before I can get the data on the “DEMAND”

This is total amount of offers made to purchase bonds.

The same thing will occur this week, since one of the auctions failed.

https://twitter.com/prune602/status/1851317346041778344

Depending on when I get the data, I’ll either update this thread or the numbers will be provided in next week’s thread.

Also, if you weren’t aware, I’m still adding to the Russian Debt thread which you can find here. It will connect a lot of dots.

https://twitter.com/prune602/status/1846377339946405962

This was the first Auction Day Following the Key Rate Hike to 21.00%.

I discussed the rate increase in last week’s thread. The next Russian Central Bank Meeting will be on the 20 December 2024, and the Central Bank has indicated that it may raise the rate again then.

The Russian Central Bank has also posted its schedule of meetings for 2025 which I’ve added to this table for reference.

The Russian Central Bank does have the option to hold emergency meetings. The dates in red indicate emergency meetings in the past.

Putin signed the law for the 2024 1.5 Trillion Ruble Deficit Limit Increase. This thread provides more details on that.

https://twitter.com/prune602/status/1851290065198064022

Here are the translated pages.

The amended budget had a deficit of 2.120 Trillion Rubles. The additional 1.5 Trillion increases to new deficit limit 3.620

https://twitter.com/prune602/status/1851290076774289718

The Russian Ministry of Finance has said that they predict the new deficit to be 3.296 Trillion rubles, and even used it in the table of September’s budget results.

But they have a long history of being wrong. (This is the 3rd estimated budget deficit for 2024, so that’s a clue)

Disingenuous people will try to draw your eye to fact that there isn’t a deficit currently. But that new bigger deficit prediction was unveiled in the same report.

And as you can see when the results are mapped on a per month basis, things get expensive in December.

Note: The deficit could be even HIGHER than the 1.5 trillion increase that was just approved. They have a history of doing that. We won’t know what it ACTUALLY is until January 2025 (if we’re lucky)

But based on past experience, I would plan on them taking the whole 1.5 trillion increase until proven otherwise.

A lot of people will just say that they can pull the extra money out of the NWF this year and everything will be fine.

The problem is, there’s more stuff going on in that table for funding the deficit and just the deficit.

And they aren’t giving us an update to this table to go along with their deficit increase, we have no clue what their plan is (if one exists)

So I wanted to give quick HYPOTHETICAL of what could happen.

Let’s say that the government planned to fund the additional 1.5 Trillion Ruble increase through additional OFZ Bond placements only. And anything they didn’t accomplish that way, they’d just pull from the NWF.

That means that we’re ignoring changes to any other values on the table. Now let’s assume that the Ministry of Finance doesn’t place anything other than what they’ve already placed in OFZ Bonds. Things stop where we are now.

Here is the result of that HYPOTHETICAL scenario

Over 4.6 Trillion Rubles get pulled from the National Welfare Fund.

Here are the most recent valuations for what is in the National Welfare Fund. I wouldn’t rely on anything but liquid assets.

And as you saw from the recent updates to the debt thread, this method could massively worsen inflation.

And it looks as if the Ministry of Finance has told everyone that in 2025 they’re going to try to rely on OFZ Bond placements EVEN MORE than they are now! 😵‍💫

Note: This would be determined in the table for the 2025 Budget that has been submitted to the Duma but not yet approved

https://twitter.com/prune602/status/1838624555557933353

If things go as they have in previous years, the 2025 Budget plan will be get approved sometime around the first week of December. By most accounts, it does not seem like its metrics are…in keeping with reality.

But they do have time to change it!

Since there is no updated table forthcoming for the new deficit increase, we are going to continue to rely on the Q4 placement goal provided by the Ministry of Finance for our table.

I discussed this problem in great detail in this thread if you want more details. (Plus there’s another video in case you missed it!)

https://twitter.com/prune602/status/1847029912013504523

If we take a look at the Surplus Liquidity Chart, there still isn’t any.

As of 31 October, there is a 816.1 Billion Ruble Liquidity DEFICIT.

I *think* there were some corporate tax payments due, so that may explain most of the HUGE drop

cbr.ru/eng/hd_base/bl…

Although it is likely that things will improve somewhat after all the funds settle, you can still see the downward trajectory in terms of liquidity overall.

We’ll still have the charts and more details to look at!

To be continued in Part 2!