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CEE MARKETS-Czechs buck regional FX, bonds firming on Trump rate comments
April 13, 2017 / 8:56 AM / 6 months ago

CEE MARKETS-Czechs buck regional FX, bonds firming on Trump rate comments

    * Polish, Hungarian bond yields near multi-month lows on
Trump
    * Trump comments on lower rates help currencies firm
    * Czechs buck rise on uncertainty over mountain of crown
longs
    * Hungarian bond auction seen drawing strong demand

    By Sandor Peto
    BUDAPEST, April 13 (Reuters) - Czech markets bucked a
strengthening of Central European currencies and debt on
Thursday, weighed down by a huge amount of outstanding
speculative long Czech crown positions.
    Other regional markets firmed after U.S. President Donald
Trump signalled that he wanted interest rates to stay low and
the dollar weaker.
    The forint and the zloty firmed slightly
against the euro.
    But the crown continued to retreat. Trading at
26.74, it was weaker by 0.1 percent, one week after the Czech
central bank removed its cap which had kept the currency weaker
than 27 since 2013.
    It is still stronger than the cap, buoyed by the strength of
the Czech economy, but is held back by the long positions worth
tens of billion euros, which investors had built, betting for a
crown surge.
    Raiffeisen analysts said any crown appreciation over the
coming weeks could be sluggish.
    "This hinges largely on the high speculative capital inflow
we had seen prior to the abandoning that makes a closing of CZK
positions in a comparably small Czech FX market difficult," they
said in a note.
    One Prague trader said: "I would not want to be in (the
long-crown) people's skin right now. One loses nerve, then a
second and a third and there could be quite a mess."
    Czech short- and medium-term government debt yields rose,
with 2-year papers bid at zero, up 8 basis points.
    Polish and Hungarian debt yields, meanwhile, fell 1-3 basis
points, trading near multi-month lows. Poland's 10-year yield,
at 3.407 percent, was the lowest since November.
    With yields dropping in international markets on Trump's
comments, Hungary could sell bonds at its auction below
secondary market yields. The government may lift its 45 billion
forint  ($153.50 million) offer, one Budapest-based fixed income
trader said.
    "Also, some primary dealers may be in shorts, after a rise
in foreign investors' bond holdings in the past
month," the trader said, adding though that Trump's comments do
not end uncertainty over global interest rate trends.
    Romania will also tender 5-year bonds on Thursday, and the
Czech Republic offers 115-day Treasury bills.
    The leu and some Romanian government bonds eased
slightly.
    Romania and the Czech Republic revealed plans on Wednesday
to further loosen their budgets.
    Czech lawmakers, preparing for elections this year, approved
speeding up pension increases.
    Romania's ruling leftists plan a new taxation system from
2018 which would further lower taxes even though investors are
already concerned over the looseness of the budget.
    
              CEE        SNAPS   AT  1005          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.74  26.70  -0.13  1.00%
                            00     65      %  
 Hungary                 312.3  312.3   +0.0  -1.12
 forint                    300    950     2%      %
 Polish                  4.243  4.246   +0.0  3.78%
 zloty                       5      8     8%  
 Romanian                4.519  4.517  -0.03  0.35%
 leu                         0      8      %  
 Croatian                7.438  7.438   +0.0  1.57%
 kuna                        0      5     1%  
 Serbian                 123.5  123.6   +0.0  -0.19
 dinar                     900    950     8%      %
 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                  976.8  983.6  -0.69   +6.0
                             7      1      %     0%
 Budapest                32478  32409   +0.2   +1.4
                           .07    .94     1%     8%
 Warsaw                  2220.  2214.   +0.2   +13.
                            37     06     8%    99%
 Bucharest               8232.  8217.   +0.1   +16.
                            77     83     8%    20%
 Ljubljana               777.0  779.4  -0.31   +8.2
                             3      1      %     8%
 Zagreb                  1898.  1903.  -0.25  -4.82
                            60     28      %      %
 Belgrade     <.BELEX15  733.4  734.4  -0.14   +2.2
              >              3      8      %     4%
 Sofia                   656.0  656.5  -0.09   +11.
                             2      9      %    87%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR      0  0.084   +086   +11b
              >                          bps     ps
   5-year     <CZ5YT=RR  0.312  0.054   +084   +7bp
              >                          bps      s
   10-year    <CZ10YT=R  1.046  -0.02   +087  -1bps
              R>                    9    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.013  0.003   +288   +3bp
              >                          bps      s
   5-year     <PL5YT=RR  2.876  -0.03   +340  -2bps
              >                     3    bps  
   10-year    <PL10YT=R  3.418  -0.01   +324   +0bp
              R>                    7    bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.31   0.32   0.41      0
              PRIBOR=>                        
 Hungary              <   0.21   0.27   0.34   0.16
              BUBOR=>                         
 Poland               <   1.75   1.77   1.83   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 

($1 = 293.1600 forints)

 (Aditional reporting by Jason Hovet in Prague)
  
 
 

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