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13 days ago
CEE MARKETS-Currencies firm on Fed and C/As, bonds tread water
July 14, 2017 / 9:45 AM / 13 days ago

CEE MARKETS-Currencies firm on Fed and C/As, bonds tread water

8 Min Read

    * Forint, zloty touch multi-week highs on Fed, U.S. CPI
watched
    * Czechs post May C/A deficit, but C/As help regional
currencies
    * Hungarian bonds rebound may have some room to
continue-trader

    By Sandor Peto
    BUDAPEST, July 14 (Reuters) - The forint hit a
one-month high against the euro on Friday as Central European
units continued to firm, still buoyed by Fed comments that were
less hawkish than expected, and a healthy outlook for the
region's current accounts.
    The forint and the zloty strengthened by 0.1
percent by 0856 GMT, to multi-week highs, and the Czech crown
 and the leu also firmed slightly.
    Federal Reserve Chair Janet Yellen indicated on Wednesday
that the Fed's rate hikes could be gradual rather than fast.
    That has increased risk appetite in global markets and has
also taken pressure off government bonds in the European Union's
eastern members.
    Investors in this part of the world focus on the policy of
the European Central Banks, which has shifted towards a more
hawkish rhetoric, but also watch the Fed and U.S. long-term debt
yields.
    Poland's 10-year bond yield dropped 2 basis points to 3.31
percent.
    Hungarian yields were flat, but the 10-year yield, after 30
basis point rise in the past three weeks to about 3.3 percent,
may continue to retreat next week from current levels at 3.08
percent, one Budapest-based fixed income trader said.
    "Of course, only if nothing changes. It hinges on economic
data (in developed markets) and U.S. and European bond market
developments," the trader said, adding that the next key figures
watched were U.S. inflation data due later on Friday.
    Hungary has filed a shelf registration in Japan for Samurai
and Uridashi bonds issues, the Reuters news service IFR said.
 
    The region's assets are less vulnerable to developments in
the dollar and in crude prices than other emerging markets due
to closer links with the euro zone and less reliance on
commodities.
    Healthy economic growth and stability, including good
current accounts helped by robust exports, have underpinned the
region's currencies even though the region's central banks are
unlikely to lift interest rates in the next quarters, except for
Czechs.
    Czech current account figures showed slightly higher than
expected deficit for May on Friday, but they follow a big
surplus in April.
    Hungary's current account dynamics remains "very supportive"
of the forint even though there is no monetary tightening in the
horizon, and Poland's economic picture is evolving nicely,
including the current account, Citigroup said in a note.
    Romania and Poland are also due to release current account
data on Friday.
    Romania's central bank indicated in the minutes of its July
3 meeting that it was not worried over a widening of the current
account deficit as industrial output continues to surge and
foreign investments keep flow in.
    
                CEE MARKETS  SNAPSH   AT  1056 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.088  26.100   +0.05   3.52%
                                  0       0       %  
 Hungary                     306.48  306.85   +0.12   0.76%
 forint                          00      50       %  
 Polish zloty                4.2185  4.2236   +0.12   4.39%
                                                  %  
 Romanian leu                4.5640  4.5652   +0.03  -0.64%
                                                  %  
 Croatian kuna               7.4110  7.4045  -0.09%   1.94%
 Serbian dinar               119.98  120.25   +0.23   2.81%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1001.0  1000.9   +0.02   +8.62
                                  9       2       %       %
 Budapest                    35886.  36143.  -0.71%   +12.1
                                 71      37              4%
 Warsaw                      2339.9  2350.8  -0.46%   +20.1
                                  2       3              2%
 Bucharest                   8151.9  8160.9  -0.11%   +15.0
                                  0       9              6%
 Ljubljana                   810.21  809.17   +0.13   +12.9
                                                  %      1%
 Zagreb                      1856.3  1854.7   +0.09  -6.94%
                                  6       6       %  
 Belgrade                    712.16  713.63  -0.21%  -0.73%
 Sofia                       711.10  709.48   +0.23   +21.2
                                                  %      6%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                      -0.1    -0.1   +052b   -9bps
                                                 ps  
   5-year                     0.049   0.036   +017b   +5bps
                                                 ps  
   10-year                    0.962       0   +039b   +3bps
                                                 ps  
 Poland                                                    
   2-year                     1.824  -0.087   +245b   -7bps
                                                 ps  
   5-year                     2.686   0.014   +281b   +3bps
                                                 ps  
   10-year                    3.323  -0.007   +275b   +2bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.42    0.51    0.59       0
                IBOR=>                               
 Hungary                <BU    0.21    0.23    0.29       0
                BOR=>                                
 Poland                 <WI   1.748   1.771   1.813    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
 (Additional reporting by Luiza Ilie in Bucharest and Bartosz
Chmielewski in Warsaw; Editing by Andrew Heavens)
  
 
 

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