December 17, 2018 / 10:29 AM / 6 months ago

CEE MARKETS-Forint firms, Hungary/Poland yield spread widens

    * Forint a tad firmer, Hungarian cbank may hint at
    * Polish 10-year yield near 2-year low ahead of net CPI data
    * Czech annual industrial PPI picks up despite crude price

    By Sandor Peto
    BUDAPEST, Dec 17 (Reuters) - The forint firmed modestly on
Monday, a day before a meeting of the Hungarian central bank
(NBH) that may provide some clues about future monetary
    Hungary's 10-year government bond yield, meanwhile, trading
at 3.25 percent, offered the highest premium over Poland's
corresponding paper in more than a month.
    The Polish yield was flat at 2.92 percent, a tad
above 2-year lows reached on Friday, ahead of November Polish
net inflation data due at 1300 GMT.
    Analysts expect a decline in annual net inflation to 0.7
percent from 0.9 percent, well below the Polish central bank's
(NBP) 2.5 percent headline inflation goal.
    The figures could reinforce expectations that the bank will
keep rates at record lows next year and possibly even longer.
    Along with Polish wage, output and retail sales data due
before Christmas, "their overall tone should be quite 'dovish',"
especially if German and U.S. data also suggest a bleaker
economic outlook for 2019, Santander Bank analysts said in a
    The Hungarian central bank is seen keeping its benchmark
interest rate, the region's lowest, at a record low of 0.9
percent at its meeting on Tuesday, according to the unanimous
forecast of analysts in a Reuters poll.
    But the bank is seen allowing the short-term BUBOR interbank
interest rates to rise slowly next year.
    It will discuss its quarterly inflation report at the
meeting which gives it a chance to flag any future policy
change, analysts said.
    The forint firmed 0.1 percent to 323.5 against the
euro by 0934 GMT. Trade was thin and the currency was weaker
then its 30-day moving average of 322.67.
    Hungarian government bond yields were steady after some
rebound last week which followed two months of declines as a
fall in global crude prices alleviated earlier inflation
    Czech data released on Monday showed a pick-up in the
industrial producer price index in November to 3.9 percent from
3.7 percent in October, despite the fall in crude prices.
    Czech central bank board member Vojtech Benda said last week
a weaker-than-expected crown was one reason to discuss
another interest rate hike at the bank's Dec. 20 meeting.
    The crown traded a shade weaker at 25.79 against the euro,
off Friday's 10-week high of 25.72. 
    "We expect that a majority of MPC members (including the
governor) will opt to wait with the rate hike until February in
order to see a rebound of inflation and CZK development," Erste
analysts said in a note.          
            CEE       SNAPSHOT   AT                         
            MARKETS             1034 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.7900   25.7850    -0.02%    -0.96%
 crown      >                                       
 Hungary    <EURHUF=  323.5000  323.8400    +0.11%    -3.89%
 forint     >                                       
 Polish     <EURPLN=    4.2901    4.2910    +0.02%    -2.65%
 zloty      >                                       
 Romanian   <EURRON=    4.6555    4.6553    -0.00%    +0.52%
 leu        >                                       
 Croatian   <EURHRK=    7.3960    7.3902    -0.08%    +0.46%
 kuna       >                                       
 Serbian    <EURRSD=  118.6000  118.4500    -0.13%    -0.08%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1029.46  1028.400    +0.10%    -4.52%
 Budapest             39853.94  40125.72    -0.68%    +1.21%
 Warsaw                2300.08   2303.41    -0.14%    -6.55%
 Bucharest             8547.31   8574.48    -0.32%   +10.23%
 Ljubljana  <.SBITOP    792.61    797.02    -0.55%    -1.71%
 Zagreb                1741.06   1734.00    +0.41%    -5.52%
 Belgrade   <.BELEX1    751.24    745.55    +0.76%    -1.13%
 Sofia                  589.60    589.60    +0.00%   -12.97%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.6600    0.0710   +227bps     +8bps
   5-year   <CZ5YT=R    1.8260    0.0500   +210bps     +5bps
   10-year  <CZ10YT=    1.9680    0.0000   +171bps     +0bps
   2-year   <PL2YT=R    1.4130   -0.0100   +202bps     +0bps
   5-year   <PL5YT=R    2.3690    0.0040   +264bps     +0bps
   10-year  <PL10YT=    2.9340    0.0020   +268bps     +0bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.19      2.28      2.34      2.02
 Hungary                  0.31      0.54      0.84      0.13
 Poland                   1.76      1.78      1.80      1.72
 Note: FRA  are for ask prices                              
 (Reporting by Sandor Peto
Editing by Gareth Jones)
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