April 15, 2019 / 2:20 PM / 8 months ago

CEE MARKETS-Forint rebounds, Hungary's 10-year yield sets 4-month high

    * Forint tracks rebound in global risk-on mood
    * Hungarian construction data underpin GDP output growth
    * Hungarian 10-year bond yield spread over Bunds sets

 (Updates prices)
    By Sandor Peto
    BUDAPEST, April 15 (Reuters) - The forint gained on Monday,
benefiting from increased appetite for risky assets, while a
rise in inflation in Central Europe boosted Hungary's 10-year
government bond yield to a 4-month high.
    Money flowed from safe-haven currencies into riskier units
globally, and the dollar also retreated, with its selling
helping currencies in the European Union.
    The forint bounced from Friday's 3-month low
against its main Central European peer, the zloty.
    It firmed a third of a percent versus the euro,
approaching the 320 psychological line, after piercing its
200-day moving average at 320.90.
    The forint has underperformed in recent weeks because rising
consumer prices across the region brought Hungary's annual
inflation near the top of the central bank's 2 to 4 percent
target range by March.
    The Polish rate, confirmed at 1.7 percent on Monday, is near
the bottom of its 1.5 to 3.5 percent target range.
    Hungary's central bank (NBH) raised one of its interest
rates on March 26, but dropped its guidance of gradual monetary
tightening, saying that its policy would hinge on data.
    Hungarian construction output jumped by 48 percent in annual
terms in February, according to figures released on Monday.
    Along with a pick-up in industrial output and retail sales,
the figures indicate that annual economic growth may have
accelerated above 5 percent in the first quarter of the year,
Takarekbank analyst Gergely Suppan said in a note.
    The less hawkish central bank rhetoric and a rise in
inflation and German Bund yields have pushed Hungary's 10-year
yield higher by about 40 basis points in the past
three weeks.    
    Foreign investors have reduced their forint-denominated
government bond holding to a 4-week low.
    Rising 3 basis points on Monday, the yield set a 4-month
high. In the past days it rose more than corresponding Bunds,
and its spread over the German paper was the highest in 5
    "German yields have increased, too, and last week's
inflation figures had an impact (on Hungarian bonds) as well,"
one Budapest-based trader said.
    Poland's corresponding yield dropped 2 basis points to
2.8785 percent, while the zloty firmed 0.1 percent 4.275 versus
the euro, slightly off a 2-and-1/2-month high set earlier in the
    Polish debt yields fell due to the announcement of an
overhaul of pension funds which could lower the government's
borrowing needs in years to come, but can increase government
spending in the long run, Erste group analysts said in a note.

            CEE       SNAPSHOT   AT                         
            MARKETS             1645 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6440   25.6150    -0.11%    +0.25%
 crown      >                                       
 Hungary    <EURHUF=  320.4000  321.5000    +0.34%    +0.21%
 forint     >                                       
 Polish     <EURPLN=    4.2750    4.2776    +0.06%    +0.34%
 zloty      >                                       
 Romanian   <EURRON=    4.7600    4.7595    -0.01%    -2.23%
 leu        >                                       
 Croatian   <EURHRK=    7.4380    7.4345    -0.05%    -0.38%
 kuna       >                                       
 Serbian    <EURRSD=  118.0000  118.0000    +0.00%    +0.25%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1103.02  1104.470    -0.13%   +11.80%
 Budapest             42774.44  42940.74    -0.39%    +9.29%
 Warsaw                2356.08   2366.71    -0.45%    +3.49%
 Bucharest             8269.96   8267.38    +0.03%   +12.00%
 Ljubljana  <.SBITOP    882.58    881.14    +0.16%    +9.74%
 Zagreb                1817.12   1806.50    +0.59%    +3.91%
 Belgrade   <.BELEX1    740.59    736.32    +0.58%    -2.77%
 Sofia                  575.43    575.13    +0.05%    -3.20%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.6510   -0.1700   +223bps    -16bps
   5-year   <CZ5YT=R    1.6930    0.0150   +206bps     +1bps
   10-year  <CZ10YT=    1.8670    0.0360   +181bps     +3bps
   2-year   <PL2YT=R    1.6290   -0.0450   +221bps     -4bps
   5-year   <PL5YT=R    2.2160   -0.0260   +259bps     -3bps
   10-year  <PL10YT=    2.8950   -0.0180   +284bps     -2bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.16      2.20      2.19      2.02
 Hungary                  0.37      0.54      0.74      0.16
 Poland                   1.74      1.75      1.76      1.72
 Note: FRA  are for ask prices                              

 (Reporting by Sandor Peto, editing by Larry King and Toby
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