April 25, 2017 / 9:11 AM / 3 months ago

CEE MARKETS-Bonds ease, Hungarian central bank seen holding fire

7 Min Read

    * Forint slips with central bank expected to keep policy
loose
    * Modest issuance likely to support Czech bonds
    * Polish bond auction seen drawing healthy demand
    * Croatian budget surplus seen supporting bonds-analyst

    By Sandor Peto
    BUDAPEST, April 25 (Reuters) - Central European currencies
mostly gained on Tuesday and government bonds tracked Bunds
lower as relief over France's presidential election turned
investors towards risky assets.
    Hungary's forint was an exception, slipping 0.1 percent to
311.75 by 0756 GMT. The Hungarian central bank is expected to
reaffirm its looser monetary policy when it meets later on
Tuesday.  
    Tuesday's gains were smaller than Monday's, when markets
rallied after the first round of the French vote on Sunday. That
round left centrist Emmanuel Macron poised to win the run-off on
May 7 over the anti-euro, anti-globalisation Marine Le Pen.
    Regional stock markets were mostly unable to extend gains
after the advance on Monday, but in Warsaw the blue-chip stock
index rose 0.6 percent.
    "A quite big risk has been priced out after the French
vote," one Budapest-based trader said. "... The (Hungarian
central bank) meeting is unlikely to cause excitement."
    Hungarian bond yields were higher by about 1 basis point
from Monday.
    Yields on Czech two-year debt were was bid at zero, up 9
basis points, but government plans for modest debt issuance in
May, published on Monday, should support Czech bonds, CSOB
analysts said in a note.
    Polish bond yields rose 2 to 3 basis points, with 10-year
debt trading at 3.42 percent, before an auction.
    The offered amount, worth 6 billion to 9 billion zlotys 
($2.31 billion) is quite high, but the expected good demand
makes it hard to predict auction yields, market participants
said.
    The latest inflation figures released in the region have
been lower than expected, underpinning the Polish central bank
policy not to lift interest rates from record lows, and that
supports government bond prices.
    Out of the bonds on offer at the auction, the fixed coupon
2022 and 2027 papers are expected to draw the strongest demand,
Raiffeisen analyst Imre Stephan said in a note.
    Raiffeisen also said that Croatian debt could get support
from Monday's 2016 budget data, which showed a surplus of 0.8
percent of economic output, after a 3.4 percent deficit in 2015.
    The kuna outperformed regional currencies, firming
0.7 percent to 7.4495 versus the euro.
              CEE        SNAPS   AT  0956          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.80  26.83   +0.1  0.75%
                            50     70     2%  
 Hungary                 311.7  311.4  -0.09  -0.94
 forint                    500    750      %      %
 Polish                  4.237  4.241   +0.0  3.93%
 zloty                       3      3     9%  
 Romanian                4.526  4.529   +0.0  0.19%
 leu                         5      7     7%  
 Croatian                7.449  7.461   +0.1  1.42%
 kuna                        5      8     7%  
 Serbian                 123.3  123.3   +0.0  0.04%
 dinar                     000    450     4%  
 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                  992.7  992.5   +0.0   +7.7
                             6      2     2%     2%
 Budapest                33181  33226  -0.14   +3.6
                           .12    .46      %     8%
 Warsaw                  2309.  2296.   +0.5   +18.
                            58     90     5%    57%
 Bucharest               8270.  8296.  -0.31   +16.
                            92     75      %    74%
 Ljubljana               779.8  778.9   +0.1   +8.6
                             1      3     1%     7%
 Zagreb                  1947.  1945.   +0.1  -2.39
                            23     25     0%      %
 Belgrade     <.BELEX15  730.4  734.4  -0.54   +1.8
              >              7      0      %     3%
 Sofia                   655.3  657.9  -0.40   +11.
                             3      3      %    75%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR      0  0.085   +068   +8bp
              >                          bps      s
   5-year     <CZ5YT=RR  0.279  0.044   +062   +4bp
              >                          bps      s
   10-year    <CZ10YT=R  1.035  0.026   +069   +1bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  1.987  0.002   +267  -1bps
              >                          bps  
   5-year     <PL5YT=RR   2.85  0.007   +319   +0bp
              >                          bps      s
   10-year    <PL10YT=R  3.425  0.011   +308   +0bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.32   0.36   0.44      0
              PRIBOR=>                        
 Hungary              <   0.22    0.3   0.39   0.16
              BUBOR=>                         
 Poland               <  1.751  1.778  1.828   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 

($1 = 3.8909 zlotys)

 (Additional reporting by Jason Hovet in Prague, Bartosz
Chmielewski in Warsaw, editing by Larry King)
  
 
 

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