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CEE MARKETS-Polish bonds firm, central bank discourages rate hike bets
May 17, 2017 / 3:56 PM / 2 months ago

CEE MARKETS-Polish bonds firm, central bank discourages rate hike bets

7 Min Read

    * Polish bonds firm, central bank signals delay in rate
hikes
    * Analysts see later Hungarian rate hike in poll
    * Polish central bank says economy balanced, core CPI
moderate

 (Recasts with Polish central bank comments, poll on Hungarian
central bank interest rates)
    By Sandor Peto
    BUDAPEST, May 17 (Reuters) - Polish government bond prices
rose on Wednesday after the country's central bank indicated
that it may not start to lift interest rates next year as
analysts had predicted.
    Tuesday's economic output figures from Central Europe had
triggered expectations that the central bank may strike a less
dovish tone at the policy meeting that ended on Wednesday.
    But the bank kept rates on hold as expected and governor
Adam Glapinski said it might not need to hike rates until the
end of 2018. He said the economy was balanced, core inflation
remained low and the zloty was at the right levels.
    Analysts had been forecasting a hike in the second quarter
of next year.
    Polish government bonds extended the gains which they posted
after the finance ministry said on Tuesday that it would offer a
smaller amount than usual at its bond auction on Thursday.

    Ten-year bond yields fell 9 basis points from Tuesday's
peak.
    The zloty firmed 0.1 percent against the euro to 4.186 by
1501, near 21-month highs, while the Romanian leu
touched an eight-week low.
    With worries over a U.S. political turmoil curbing risk
appetite, Central European currencies and stocks mostly faltered
after a rally following France's presidential election, in which
a centrist candidate saw off a far-right, eurosceptic rival.
    Government bond auctions in Prague and Belgrade drew
sluggish demand as the Czechs offered illiquid papers and
investors in Serbia wanted higher yields.
    Hungarian government bonds were treading water after a
rally, mainly in longer-dated bonds, helped by a decline in U.S.
debt yields and upbeat domestic and regional economic output
data.
    Hungary's central bank is also expected to keep interest
rates on hold at its meeting on Tuesday, and analysts expect it
to add liquidity to domestic markets by further lowering its cap
on its 3-month deposit facility.
    Analysts in a May 15-17 Reuters poll forecast that the
bank's record-low 0.9 percent base rate could remain unchanged
at least until the end of next year.
    In a poll a month ago, analyst projected a rise in the rate
to 1.05 percent by the end of 2018.
    Since then the region's states have released April figures
which have showed a retreat in inflation after a fast rise since
mid-2016.
    
             CEE        SNAPS   AT  1701          
             MARKETS    HOT    CET           
                        CURRENCIES                
                        Lates  Previ  Daily  Chang
                        t      ous           e
                        bid    close  chang  in
                                      e      2017
 Czech                  26.43  26.43  -0.02  2.16%
 crown                     50     10      %  
 Hungary                308.9  309.8   +0.2  -0.03
 forint                   100    150     9%      %
 Polish                 4.185  4.190   +0.1  5.22%
 zloty                      5      7     2%  
 Romanian               4.565  4.550  -0.32  -0.66
 leu                        0      2      %      %
 Croatian               7.433  7.431  -0.02  1.64%
 kuna                       0      5      %  
 Serbian                123.0  123.1   +0.0  0.26%
 dinar                    300    050     6%  
 Note:       calculate  previ  close  1800        
 daily       d from     ous    at     CET    
 change                                      
                        STOCK                     
                        S                    
                        Lates  Previ  Daily  Chang
                        t      ous           e
                               close  chang  in
                                      e      2017
 Prague                 1020.  1027.  -0.63   +10.
                           64     12      %    75%
 Budapest               34173  34078   +0.2   +6.7
                          .12    .47     8%     8%
 Warsaw                 2302.  2340.  -1.63   +18.
                           21     34      %    19%
 Bucharest              8456.  8454.   +0.0   +19.
                           61     74     2%    36%
 Ljubljana              783.6  780.2   +0.4   +9.2
                            4      4     4%     0%
 Zagreb                 1865.  1863.   +0.1  -6.51
                           07     22     0%      %
 Belgrade    <.BELEX15  732.8  730.8   +0.2   +2.1
             >              3      9     7%     6%
 Sofia                  661.9  660.8   +0.1   +12.
                            7      7     7%    88%
                        BONDS                     
                        Yield  Yield  Sprea  Daily
                                      d      
                        (bid)  chang  vs     chang
                               e      Bund   e in
 Czech                                       sprea
 Republic                                    d
   2-year    <CZ2YT=RR      0  0.184   +068   +20b
             >                          bps     ps
   5-year    <CZ5YT=RR  0.012  -0.00   +037   +5bp
             >                     5    bps      s
   10-year   <CZ10YT=R  0.835  0.016   +046   +6bp
             R>                         bps      s
 Poland                                           
   2-year    <PL2YT=RR  1.968  0.003   +265   +2bp
             >                          bps      s
   5-year    <PL5YT=RR  2.765  -0.03   +312   +2bp
             >                     3    bps      s
   10-year   <PL10YT=R  3.332  -0.01   +295   +3bp
             R>                    5    bps      s
             FORWARD    RATE   AGREEMENT          
                        3x6    6x9    9x12   3M
                                             inter
                                             bank
 Czech Rep           <   0.37   0.45   0.54      0
             PRIBOR=>                        
 Hungary             <    0.2   0.24   0.33   0.16
             BUBOR=>                         
 Poland              <   1.77   1.78   1.83   1.73
             WIBOR=>                         
 Note: FRA   are for                              
 quotes      ask                             
             prices                          
 *************************************************
 *************
 

 (Additional reporting by Aleksandar Vasovic in Belgrade/Jason
Hovet in Prague/Agnieszka Barteczko and Marcin Goclowski in
Warsaw; Editing by Catherine Evans)
  
 
 

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