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5 months ago
CEE MARKETS-Czech bond markets calmer as cap on crown is eyed
April 3, 2017 / 9:30 AM / 5 months ago

CEE MARKETS-Czech bond markets calmer as cap on crown is eyed

    * Czech bonds ease vs fall in Polish, Hungarian yields
    * Worries that cap removal may lead to crown plunge
    * PMIs show slower-than-forecast but steady growth in region
    * Funds from Prague may flow to Warsaw, Budapest-bond
traders
    * Serbian PM Vucic wins presidential election, dinar firms

    By Sandor Peto
    BUDAPEST, April 3 (Reuters) - Czech government bonds bucked
a decline in yields to multi-month lows in Hungary and Poland on
Monday, with eyes fixed on the Czech central bank (CNB) which
may abandon a cap on the crown soon.
    Its commitment to maintain the 3-and-1/2-year-old weak crown
regime ended on Friday.
    Volatility jumped in Prague markets after the bank gave up
its guidance to exit the cap, which has kept the crown weaker
than 27 against the euro, around mid-2017.
    Markets were calmer on Monday, but swings can return as some
investors built huge positions speculating for a crown surge,
while there are worries that the currency is overbought.
    The crown eased 0.1 percent to 27.046 per euro.
    The yield on Czech 2-year bonds rose 7 basis points to
-0.505 percent. Hungarian 3-year bonds, meanwhile, traded lower
at 2-month lows around 1.1 percent.
    "There is some market speculation that the CNB could already
act today, but we would rather project the CNB to wait for
evidence of sustainability of the inflation trajectory before
triggering the exit," Raiffeisen analyst Gunter Deuber said in a
note.
    One Prague-based dealer said markets had been nervous that
the CNB may announce the exit over the week-end.
    "Now in theory it can go up until Thursday again when more
flow comes on another bet they do it on Thursday (when the bank
board holds a regular, non-policy meeting)," the trader added.
    Czech inflation has risen above the bank's target, while
prices may retreat in the region in the next months.
    Poland was the first on Friday to report March inflation
data, and a retreat in its annual figure to 2 percent pushed
back the zloty from 18-month highs versus the euro.
    It rebounded on Monday, gaining 0.4 percent, after Czech,
Hungarian and Polish PMI manufacturing indices showed
slower-than-expected, but still steady economic growth in March.
The Czech figure retreated from a 6-year high but was a robust
57.5.
    Fears of a plunge of the overbought crown may make some
foreign investors close bond buying positions in Prague.
    Polish and Hungarian government bond markets
saw heavy buying in the past weeks and part of the fresh funds
may be money withdrawn from Prague, two Budapest-based trader
said.
    Elsewhere, the dinar firmed 0.2 percent to 123.66
against the euro after Conservative Prime Minister Aleksandar
Vucic won Sunday's presidential election with a huge
margin.
    "This is good news in terms of stability," one
Belgrade-based dealer said.
    
              CEE        SNAPS   AT  1040          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.04  27.02  -0.08  -0.14
                            60     35      %      %
 Hungary                 309.1  308.7  -0.13  -0.12
 forint                    800    800      %      %
 Polish                  4.222  4.238   +0.3  4.29%
 zloty                       9      8     8%  
 Romanian                4.554  4.554   +0.0  -0.42
 leu                         0      2     0%      %
 Croatian                7.437  7.444   +0.1  1.59%
 kuna                        0      5     0%  
 Serbian                 123.6  123.8   +0.1  -0.25
 dinar                     600    500     5%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  983.6  981.1   +0.2   +6.7
                             2      5     5%     3%
 Budapest                31871  31634   +0.7  -0.41
                           .99    .26     5%      %
 Warsaw                  2196.  2175.   +0.9   +12.
                            66     96     5%    77%
 Bucharest               8085.  8069.   +0.2   +14.
                            53     34     0%    12%
 Ljubljana               771.7  774.7  -0.39   +7.5
                             0      0      %     4%
 Zagreb                  2027.  1989.   +1.9   +1.6
                            46     27     2%     4%
 Belgrade     <.BELEX15  732.3  732.5  -0.02   +2.0
              >              7      1      %     9%
 Sofia                   632.8  633.9  -0.19   +7.9
                             0      9      %     1%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.50  0.068   +026   +9bp
              >              5           bps      s
   5-year     <CZ5YT=RR  0.148  0.032   +055   +6bp
              >                          bps      s
   10-year    <CZ10YT=R  0.926  0.028   +061   +4bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  #VALU  0.013  #VALU   +4bp
              >           E!            E!        s
   5-year     <PL5YT=RR  #VALU  -0.05  #VALU  -3bps
              >           E!        6   E!    
   10-year    <PL10YT=R  #VALU  -0.05  #VALU  -4bps
              R>          E!        1   E!    
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.28   0.31   0.34      0
              PRIBOR=>                        
 Hungary              <   0.19   0.22   0.32   0.18
              BUBOR=>                         
 Poland               <   1.76   1.78  1.805   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Aleksandar Vasovic in Prague; Editing
by Stephen Powell)
  
 
 

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