Risk-off mood persists; liquidity still scarce; Thailand, Indonesia widen; Ukraine tone better

By Christine Van Dusen

Atlanta, Dec. 15 – Emerging markets assets started Monday’s session on a weak note, as liquidity continued to thin and investors remained in risk-off mode, even as oil prices managed a small bounce.

“Market sentiment began the week on a jittery note, amid news of a hostage siege at a Sydney cafe,” according to a report from Barclays Research. “Oil rallied from multi-year lows following reports that Libya closed two of its oil ports.”

Russian credit default swaps were 5 basis points wider than Friday and Turkey’s were 4 bps wider, a source said.

“As we move ever closer to Christmas, client flows are limited here,” a London-based analyst said.

“Still some buyers of Russia around, but they have been very selective and remain a small minority,” the analyst said.

The tone for assets from Ukraine improved on Monday, as the new truce with Russian separatist forces was “holding better,” according to a report from Commerzbank.

From Asia, the market firmed up slightly into the open but saw sellers, a London trader said.

Bonds from Thailand were about 5 bps wider, while property corporates from China moved 1/8 point to 3/8 point lower.

Indonesia’s curve was ˝ point to 1 point lower and 5 bps to 10 bps wider on a spread basis, he said.

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