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CEE MARKETS-Bonds extend gains, Warsaw and Budapest stock test highs
October 12, 2017 / 9:18 AM / in 12 days

CEE MARKETS-Bonds extend gains, Warsaw and Budapest stock test highs

    * Zloty eases a touch on dollar rebound
    * Budapest stocks touch record high, Warsaw almost 4-year
high
    * Hungarian bonds auction seen drawing strong demand

    By Sandor Peto and Marcin Goclowski
    BUDAPEST/WARSAW, Oct 12 (Reuters) - Central European
government bonds extended their gains on Thursday before an
auction in Budapest which is expected to draw strong demand.
    A weakening of the dollar fuelled capital flows into the
region's liquid currencies and government bonds this week.
    The U.S. currency regained some ground on Thursday, causing
a minor retreat of the zloty against the euro in
morning trade, while the forint stayed steady.
    But its weakness still fuels appetite for assets in emerging
markets, including Central Europe.
    A correction in the euro/zloty was timely after the past
days' gains, but it may appreciate again after the publication
of the breakdown of September Polish inflation data, due at 1200
GMT, BZ WBK analysts said in a note.
    "The data should influence investors' expectations about the
path of interest rates in Poland, bringing the date of the first
(Polish central bank interest) rate hike closer," they said.
    Since the preliminary figures showed a rise in annual
inflation two weeks ago, Polish forward rate agreements
 have surged, pricing in a start of hikes within 12
months. Most analysts have projected a later rise.
    The expectations, however, are not cutting demand for
high-yielding Polish bonds which are also supported by capital
flowing out of the dollar.
    In Hungary, traders expected robust demand for bonds which
the government auctions on Thursday.
    Hungarian and Polish government bond yields dropped further
by 2-4 basis points.
    "I expect strong demand, and the papers will be probably
sold by a few basis points below the current market levels," one
Budapest-based fixed income trader said.
    Budapest's stock index tested record highs in early
trade and Polish shares set their highest level since
late 2013, joining a global trend, before some retreat. 
               CEE MARKETS  SNAPSH   AT  1048 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.881  25.879  -0.01%   4.35%
                                 0       5          
 Hungary                    309.15  309.33   +0.06  -0.11%
 forint                         00      50       %  
 Polish zloty               4.2699  4.2666  -0.08%   3.14%
 Romanian leu               4.5900  4.5852  -0.10%  -1.20%
 Croatian                   7.5070  7.5105   +0.05   0.64%
 kuna                                            %  
 Serbian                    119.30  119.46   +0.13   3.39%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1054.8  1054.3   +0.04   +14.4
                                 1       7       %      5%
 Budapest                   38526.  38453.   +0.19   +20.3
                                68      12       %      8%
 Warsaw                     2548.5  2551.7  -0.13%   +30.8
                                 3       8              3%
 Bucharest                  8010.8  8004.8   +0.07   +13.0
                                 3       4       %      7%
 Ljubljana                  812.45  814.90  -0.30%   +13.2
                                                        2%
 Zagreb                     1854.9  1849.3   +0.30  -7.01%
                                 7       8       %  
 Belgrade                   725.73  726.96  -0.17%   +1.17
                                                         %
 Sofia                      672.06  672.80  -0.11%   +14.6
                                                        0%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.057       0   +076b   +1bps
                                                ps  
   5-year                    0.486   0.004   +076b   +2bps
                                                ps  
   10-year                   1.357  -0.007   +091b   +1bps
                                                ps  
 Poland                                                   
   2-year                    1.714       0   +241b   +1bps
                                                ps  
   5-year                    2.693  -0.026   +296b   -1bps
                                                ps  
   10-year                   3.387  -0.028   +294b   -1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.75    0.89       1       0
               IBOR=>                               
 Hungary               <BU    0.07   0.105    0.16    0.03
               BOR=>                                
 Poland                <WI    1.79    1.83    1.89    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
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 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Angus MacSwan)
  
 
 

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