April 28, 2020 / 2:34 PM / a month ago

UPDATE 1-CEE MARKETS-Hungarian central bank announces details of QE, yields lower

 (Updates with central bank announcement)
    By Anita Komuves
    BUCHAREST/BUDAPEST, April 28 (Reuters) - Bond yields
retreated and the forint weakened versus the euro after
Hungary's central bank left interest rates unchanged on Tuesday,
as expected, and said it would set no target amount for its
bond-buying programme.
    The NBH said it would launch its bond-buying programme and
mortgage bond purchases on May 4. Deputy Governor Marton Nagy
told reporters that the bank's government securities purchases
could total close to 100 billion forints a week.
    "The NBH will perform a technical revision when stock
increases reach HUF 1,000 billion in government securities and
HUF 300 billion in mortgage bonds," the NBH's statement said.

    Hungary's central bank wants to drive long-term yields
lower,Nagy told reporters. Current yields on 10-year and 15-year
debt were too high, he said.
    "Yields on the 10-year bonds dropped three basis points, and
yields on the five- and three-year tenors are two basis points
lower since the central bank's announcement," a fixed-income
trader in Budapest said. "The announcement brought some momentum
into the market." 
    Earlier this month, the NBH had abandoned its ultra-loose
policy stance as it navigated a tricky path of preventing a
sell-off in the forint while providing support for the shrinking
economy.
    The bank tightened policy in two steps at the start of April
to arrest a fall in the forint, which sank to record lows near
370 versus the euro. That propped up the currency.
    The forint weakened after the central bank announcements and
was down 0.7% on the day, trading at 357.75 versus the euro at
1357 GMT, underperforming regional currencies.
    The Czech crown gained 0.6%, while the Polish
zloty was down 0.3%. The Romanian leu traded
0.1% lower versus the euro.
    Romania's consolidated budget deficit widened to 1.7% of
gross domestic product in the first quarter compared with a gap
of 0.7% at the end of February as the coronavirus outbreak led
to a plunge in revenue, the finance ministry said.
    With the deficit above EU limits even before the new
coronavirus outbreak, Romanian assets and ratings have been
under pressure.
    Analysts said currencies would likely tread water ahead of
U.S. Federal Reserve and European Central Bank meetings later
this week.
    Stock markets gained by the afternoon, with Budapest leading
regional gains by strengthening 2.15%. The blue-chip index in
Prague was up 0.85% and Warsaw's gained 1.17%.
Bucharest was up 2%.
    
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        1557              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  27.1450  27.3010   +0.57%   -6.31%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  357.750  355.200   -0.71%   -7.44%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.5475   4.5330   -0.32%   -6.40%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.8450   4.8410   -0.08%   -1.17%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.5545   7.5527   -0.02%   -1.44%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.540  117.680   +0.12%   +0.03%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2020
 .PX     Prague              866.61  859.330   +0.85%  -22.32%
                                           0           
 .BUX    Budapest           33909.9  33196.8   +2.15%  -26.42%
                                  4        5           
 .WIG20  Warsaw    <.WIG20  1610.66  1591.97   +1.17%  -25.09%
                   >                                   
 .BETI   Buchares           8177.72  8019.11   +1.98%  -18.04%
         t                                             
 .SBITO  Ljubljan  <.SBITO   784.78   773.49   +1.46%  -15.24%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1580.90  1573.92   +0.44%  -21.64%
                   >                                   
 .BELEX  Belgrade  <.BELEX   656.02   676.83   -3.07%  -18.17%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   448.15   445.33   +0.63%  -21.12%
                   >                                   
                                                              
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   0.7640   0.0630   +144bp    +7bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.0100   0.0510   +166bp    +8bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.2860  -0.0310   +175bp    -1bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   0.6130   0.0120   +129bp    +2bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.0490   0.0430   +170bp    +7bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.4510   0.0690   +192bp    +9bps
 =RR     10-year   =RR>                             s  
                   FORWARD                                    
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     0.28     0.30     0.33     0.90
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     1.20     1.14     1.08     1.10
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     0.22     0.22     0.21     0.69
                   ><WIBOR                             
                   =>                                  
         Note:     are for ask                                
         FRA       prices                              
         quotes                                        
 
 (Reporting by Luiza Ilie in Bucharest and Anita Komuves in
Budapest; editing by Giles Elgood, Larry King)
  
 
 
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