April 19, 2018 / 10:03 AM / in 6 months

CEE MARKETS-Bond yields rise, Polish industrial output growth slows

    * Regional bond yields mostly up slightly, tracking core
markets
    * Poland's industry grows 1.8 pct in March vs 2.9 pct
forecast
    * Currencies drift off 2-month highs

    By Sandor Peto
    BUDAPEST, April 19 (Reuters) - Central European government
bond yields rose slightly on Thursday, tracking euro zone and
U.S. peers that were driven by a surge in crude prices which may
lead to more inflation.
    Hungary's 10-year bond yield rose by 3 basis points to 2.46
percent and the corresponding Czech yield was also a touch
higher. Poland's 10-year yield was steady, after a rise early
this week, but its shorter yields also rose slightly.
    Inflation figures have been mild in most of the region so
far this year despite a surge in wages and consumption, with
imported inflation remaining moderate.
    March Polish data released on Thursday showed a
bigger-than-expected slowdown in annual industrial output
growth, while the producer price index was slightly higher than
expected.  
    Warsaw-listed shares in the financial sector, which can
benefit from higher inflation, firmed, driving a 0.7 percent
rise in the bourse's bluechip index to a 5-week high.
    The rise, however, was attributed by a trader and an analyst
to the regional trend of recovery from a decline in share prices
in February and March.
    The Polish central bank (NBP) lowered its inflation
forecasts earlier this year and its Governor Glapinski
reiterated that interest rates could stay unchanged at record
lows for years.
    Economic output growth is seen remaining strong in Poland
and across the region.
    "We expect (Polish) GDP growth to land at 4.2 percent this
year amid limited inflationary pressure that supports stability
of (NBP) rates scenario," Erste analyst Katarzyna Rzentarzewska
said in a note after the Polish figures were released.
    Currencies did not show signs of expectations for a shift
towards more hawkish monetary policies in the region either.
    Central Europe's main four units -- the Czech crown
, the forint, the leu and the zloty
 -- eased slightly, by less than 0.1 percent against
the euro, drifting off the 2-month highs they reached in the
past days.
    The zloty failed to benefit from comments from a Standard &
Poor's analyst who said the agency may raise Poland's credit
rating if the fiscal deficit remains around 2 percent of
economic output.  
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1046 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.3280   25.3220    -0.02%    +0.84%
 crown      >                                       
 Hungary    <EURHUF=  310.3900  310.1900    -0.06%    +0.17%
 forint     >                                       
 Polish     <EURPLN=    4.1669    4.1645    -0.06%    +0.23%
 zloty      >                                       
 Romanian   <EURRON=    4.6552    4.6545    -0.02%    +0.53%
 leu        >                                       
 Croatian   <EURHRK=    7.4120    7.4120    +0.00%    +0.25%
 kuna       >                                       
 Serbian    <EURRSD=  118.1100  118.1900    +0.07%    +0.33%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1129.33  1128.980    +0.03%    +4.75%
                                       0            
 Budapest             38623.72  38766.49    -0.37%    -1.91%
 Warsaw                2332.29   2315.50    +0.73%    -5.24%
 Bucharest             8950.29   8933.46    +0.19%   +15.43%
 Ljubljana  <.SBITOP    839.49    837.61    +0.22%    +4.11%
            >                                       
 Zagreb                1790.64   1788.46    +0.12%    -2.83%
 Belgrade   <.BELEX1    738.48    737.39    +0.15%    -2.81%
            5>                                      
 Sofia                  663.04    660.45    +0.39%    -2.13%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    0.7520    0.0060   +129bps     -2bps
            R>                                      
   5-year   <CZ5YT=R    1.1410    0.0150   +118bps     -2bps
            R>                                      
   10-year  <CZ10YT=    1.7330    0.0080   +117bps     -3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5360    0.0010   +208bps     -3bps
            R>                                      
   5-year   <PL5YT=R    2.3010    0.0140   +234bps     -2bps
            R>                                      
   10-year  <PL10YT=    3.0090   -0.0030   +245bps     -4bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                0.95      1.04      1.18      0.90
            <PRIBOR=                                
            >                                       
 Hungary                  0.07      0.10      0.18      0.03
                                                    
 Poland                   1.72      1.73      1.76      1.70
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
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 (Additional reporting by Anna Koper in Warsaw; Editing by
Elaine Hardcastle)
  
 
 
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