The Russian currency sank to a fresh low on Thursday even after the central bank raised interest rates. The ruble fell as much as 1.4% against the dollar to 55.5955 as investors speculated that the rate increase was not large enough to halt the currency’s 41% depreciation against the dollar this year—the worst performing currency after Ukraine’s hrynia. Russia’s stocks markets slumped with the benchmark MICEX Index and the dollar-denominated RTS Index sliding 2.2% and 3.5%, respectively.
Brent oil prices, the global benchmark, fell below $65 a barrel for the first time in more than 5 years after OPEC cut 2015 crude demand forecast to 12-year low. Brent for January delivery declined 2.5% (or $1.65) to $64.19 a barrel in afternoon trading on the London exchange, the lowest level since September 2009, and extending year-to-date drop to 41%. Meanwhile, West Texas Intermediate (WTI) lost as much as 3.1% to $61.82 a barrel on the New York exchange, the lowest level since July 2009.
The yield gap between U.S. Treasury 5-year notes and 30-year bonds slid to the narrowest level in nearly six years as signs of slowing inflation boosted relative allure of longer-term government securities. The difference, also known as the yield curve, fell to 139 basis points as the benchmark 10-year break-even rate, a measure of inflation expectations, touched a 3-year low of 1.78%. Today’s report showed U.S. unit labor costs fell 1% in Q3, suggesting little wage pressure.
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