Reuters logo
a month ago
CEE MARKETS-Bond yields inch higher after hawkish ECB minutes
July 7, 2017 / 9:30 AM / a month ago

CEE MARKETS-Bond yields inch higher after hawkish ECB minutes

    * Bond yields rise slightly further after Thursday's surge
    * More hawkish ECB may have started yield rise trend -trader
    * Forint firms after higher than expected trade surplus
    * Hungarian, Polish ratings seen unchanged in reviews

    By Sandor Peto and Radu-Sorin Marinas
    BUDAPEST/BUCHAREST, July 7 (Reuters) - Central European
government bonds slipped further on Friday following a surge in
yields after the European Central Bank left the door open to
monetary stimulus tapering on Thursday.
    ECB board member Benoit Coeure fine-tuned the message in
interviews on Friday, saying that any policy adjustment should
be careful to avoid disrupting markets, and underlying inflation
remained weak despite a pick-up in growth in the euro zone.
    But after Thursday's jump in the 10-year Bund yield above
0.5 percent, many investors think hawkish comments from global
central banks have triggered a trend of rising bond yields, one
Budapest-based fixed income trader said.
    "Many people tend to think now that (ECB President Mario)
Draghi's speech last week (about possible policy tweaks) was a
watershed," the trader said, adding that "after years of strong
price gains a correction looks reasonable".
    Hungary's 10-year bond yield has risen about 35 basis points
in the past two weeks to 3.18 percent, while the country's
shorter than one-year debt yields remain near zero, kept low by
the Hungarian central bank's loose policies.
    Hungarian and Polish long-term yields rose 1-2 basis points
on Friday after a 10 basis point jump on Thursday.
    The yield on Czech 10-year bonds was bid at 1.07 percent, up
5 basis points.
    The rise in long-term yields is caused by global factors,
while domestic fundamentals remain strong and also shield
currencies in the region which is immune to a recent decline n
crude prices unlike some other emerging markets, analysts said.
    A surge in Hungary's budget deficit in June did not trigger
worries as it was caused by one-off factors.
    Figures showing a higher-than expected May trade surplus
helped the forint strengthen, one dealer said, adding that
Moody's is unlikely to change the country's sovereign rating in
a review due after local markets close.
    Fitch is due to review Poland's rating, but analysts expect
no change. 
    The only country in the region where a possible rise in the
budget deficit has been a worry is Romania.
    Romania's 10-year bond yield was still flat, bid at 4.03
percent, after robust demand at an auction on Thursday, which
followed significant expiries in Romanian debt last month.
    "With another large redemption on the horizon this month,
liquidity should remain sufficient to keep rates subdued," ING
analysts said in a note.
                CEE MARKETS  SNAPSH   AT  1106 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.115  26.140   +0.10   3.42%
                                  0       5       %  
 Hungary                     308.31  309.03   +0.23   0.17%
 forint                          00      00       %  
 Polish zloty                4.2345  4.2338  -0.02%   4.00%
 Romanian leu                4.5860  4.5903   +0.09  -1.11%
                                                  %  
 Croatian kuna               7.4140  7.4035  -0.14%   1.90%
 Serbian dinar               120.15  120.41   +0.22   2.66%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      991.40  986.78   +0.47   +7.57
                                                  %       %
 Budapest                    35520.  35615.  -0.27%   +10.9
                                 30      00              9%
 Warsaw                      2294.7  2300.7  -0.26%   +17.8
                                  8       4              1%
 Bucharest                   8094.1  8079.2   +0.19   +14.2
                                  8       3       %      4%
 Ljubljana                   802.81  797.56   +0.66   +11.8
                                                  %      8%
 Zagreb                        0.00  1888.5   +0.00  -100.0
                                          7       %      0%
 Belgrade                    711.62  709.41   +0.31  -0.80%
                                                  %  
 Sofia                       710.28  711.12  -0.12%   +21.1
                                                         2%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                     0.224   0.075   +083b   +10bp
                                                 ps       s
   5-year                     0.101  -0.002   +017b   +0bps
                                                 ps  
   10-year                     1.07   0.046   +051b   +4bps
                                                 ps  
 Poland                                                    
   2-year                     1.881  -0.146   +248b  -12bps
                                                 ps  
   5-year                     2.733  -0.012   +280b   -1bps
                                                 ps  
   10-year                    3.397  -0.011   +283b   -1bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.43    0.54    0.64       0
                IBOR=>                               
 Hungary                <BU    0.21    0.23    0.25    0.15
                BOR=>                                
 Poland                 <WI   1.752   1.776   1.828    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
 (Additional reporting by Bartosz Chmielewski in Warsaw; editing
by Alexander Smith)
  
 
 

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below