The smallest difference in three months between yields on Israel’s inflation-linked and fixed- rate bonds is signaling the central bank may keep interest rates on hold without causing consumer price growth to pick up.
The plunging ruble is prompting Morgan Stanley to switch its interest-rate forecast to an increase from a cut as inflation risks mount, punishing holders of Russian bonds already roiled by rising tensions with Ukraine.
Goldman Sachs Group Inc. predicts Russia will contain losses in the ruble as policy makers pledge to curb volatility after ratcheting up interest rates and selling billions of dollars in the currency market yesterday.
The forint tumbled to the weakest level in 14 months and the cost to insure Hungary’s debt against default soared as the International Monetary Fund and European Union ended talks without endorsing Prime Minister Viktor Orban’s plans to control the budget deficit.
The lira will keep underperforming other emerging-market currencies and investors should buy dollars if Turkey’s currency appreciates, while avoiding “chasing” lira weakness as central bank may step in to support the currency, Morgan Stanley said.