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CEE MARKETS-Hungarian bonds buck easing on loose central bank policy
April 27, 2017 / 9:26 AM / 7 months ago

CEE MARKETS-Hungarian bonds buck easing on loose central bank policy

    * Fx, stocks rangebound after post-French-vote rally
    * Hungarian bond yields drop ahead of auction, bucking EU
    * Hungary's loose monetary policy support its bond market

    By Sandor Peto
    BUDAPEST, April 27 (Reuters) - Hungarian government bonds
firmed ahead of an auction on Thursday, bucking a rise in debt
yields across the European Union, supported by the Hungarian
central bank's loose policy.
    European yields mostly rose slightly after sources close to
the European Central Bank's Governing Council told Reuters that
policy makers see scope for sending a small signal in June
towards reducing monetary stimulus.
    Central banks in the eastern wing of the EU have not showed
any sign so far that a change in their loose monetary policies
may be near, and Hungary's central bank is regarded as the most
dovish among them.
    It reaffirmed after its meeting on Tuesday that it wanted to
maintain loose monetary conditions and would be ready to ease
policy further if warranted by inflation trends.
    Hungarian government bond yields dropped by 3-6 basis points
and that signals that Thursday's auction is likely to
draw healthy demand, one Budapest-based trader said.
    The central bank's policy to keep forint liquidity
relatively high in markets creates demand for government bonds
from commercial banks, mainly for short- and medium-term
maturities, said Gergely Urmossy, analyst of Erste in Budapest.
    "Despite the pick-up in lending they will not be able to
place out all their forint liquidity as loans, so they buy
government bonds," he said.
    "About the ECB, my feeling remains that they are not very
close to starting to taper their stimulus," he added.
    Currencies remained rangebound and equities indices mostly
dropped slightly in the region's capitals after a rally earlier
this week as the win of centrist Emmanuel Macron in France's
first-round presidential election on Sunday pleased markets.
     
              CEE        SNAPS   AT  1056 CET        
              MARKETS    HOT                    
                         CURRENCIES                  
                         Lates  Previ  Daily    Chang
                         t      ous             e
                         bid    close  change   in
                                                2017
 Czech crown             26.95  26.92   -0.13%  0.19%
                            50     00           
 Hungary                 312.6  312.5   +0.00%  -1.21
 forint                    000    900               %
 Polish                  4.229  4.229   -0.01%  4.12%
 zloty                       5      1           
 Romanian                4.530  4.534   +0.09%  0.11%
 leu                         0      1           
 Croatian                7.472  7.469   -0.03%  1.11%
 kuna                        0      5           
 Serbian                 123.0  123.1   +0.08%  0.21%
 dinar                     900    900           
 Note: daily  calculate  previ  close  1800          
 change       d from     ous    at     CET      
                         STOCK                       
                         S                      
                         Lates  Previ  Daily    Chang
                         t      ous             e
                                close  change   in
                                                2017
 Prague                  1000.  998.7   +0.21%   +8.6
                            85      4              0%
 Budapest                33129  33198   -0.21%   +3.5
                           .64    .93              2%
 Warsaw                  2373.  2383.   -0.43%   +21.
                            60     97             85%
 Bucharest               8206.  8238.   -0.39%   +15.
                            10     13             82%
 Ljubljana                0.00  788.2   +0.00%  -100.
                                    5             00%
 Zagreb                  1936.  1938.   -0.12%  -2.92
                            61     92               %
 Belgrade     <.BELEX15  733.3  731.5   +0.24%   +2.2
              >              4      6              3%
 Sofia                   649.2  650.7   -0.23%   +10.
                             5      5             71%
                         BONDS                       
                         Yield  Yield  Spread   Daily
                         (bid)  chang  vs Bund  chang
                                e               e in
 Czech                                          sprea
 Republic                                       d
   2-year     <CZ2YT=RR  0.045  0.023   +073bp   +2bp
              >                              s      s
   5-year     <CZ5YT=RR  0.269  0.058   +061bp   +5bp
              >                              s      s
   10-year    <CZ10YT=R      1  0.006   +065bp   +1bp
              R>                             s      s
 Poland                                              
   2-year     <PL2YT=RR  1.991  0.006   +268bp   +0bp
              >                              s      s
   5-year     <PL5YT=RR  2.883  -0.03   +322bp  -4bps
              >                              s  
   10-year    <PL10YT=R  3.438  -0.01   +308bp  -2bps
              R>                    9        s  
              FORWARD    RATE   AGREEMENT            
                         3x6    6x9    9x12     3M
                                                inter
                                                bank
 Czech Rep            <   0.32   0.38     0.47      0
              PRIBOR=>                          
 Hungary              <   0.21   0.28     0.37      0
              BUBOR=>                           
 Poland               <  1.753  1.786    1.839   1.73
              WIBOR=>                           
 Note: FRA    are for                                
 quotes       ask                               
              prices                            
 ****************************************************
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 (Reporting by Sandor Peto; Editing by Toby Chopra)
  
 
 

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