April 11, 2019 / 10:04 AM / 2 months ago

CEE MARKETS-Hungarian yields rebound after auction, tracking euro zone bonds

    By Sandor Peto
    BUDAPEST, April 11 (Reuters) - Hungarian government bond
yields rose as the government held its bi-weekly auction on
Thursday, tracking euro zone yields.
    Safe-haven German yields also edged up after European Union
leaders gave Britain a six-month extension to leave the bloc,
meaning it will not crash out on Friday without a withdrawal
deal. 
    Hungarian yields rose by 3-4 basis points across the curve.
    The 5-year paper was sold at an average yield of 2.09
percent at the auction which drew healthy demand,
and the government sold more papers than its original offer.

    For most of the week, Hungarian bond yields traded near
multi-week highs, before dovish comments from the European
Central Bank late on Wednesday knocked Hungary's yield curve
down by 5-6 basis points.
    The forint gave up some ground against the euro
zone, in line with its regional peers, after a strengthening in
the previous session partly due to figures showing a pick-up in
inflation in the region.
    Comments from the ECB and the Fed signaling no tightening in
policy also made the region's currencies and bonds relatively
more attractive, but also fueled worries over economic growth.
    While Czech government bond yields were mostly flat,
Romanian yields continued to rise. The 10-year yield rose 6
basis points to 4.95 percent, its highest level since late
January.
    Romania's spiraling inflation, which reached 4 percent
according to March data released on Wednesday, and imbalances in
its economy draw concern, weighing on its bond prices,
Raiffeisen analyst Gintaras Shlizhyus said in a note.
    "With domestic economy likely on its way to a slowdown
another (central bank) rate hike may be unhelpful, so the
regulator would be likely to direct its attention to RON (leu)
liquidity controls, which can negatively affect ROMGBs," he
said.
    The leu eased slightly to 4.7595 against the euro
by 0953 GMT. The ROBOR overnight interbank interest rate
 was  slightly lower, at 3.17 percent.
            CEE       SNAPSHOT   AT                         
            MARKETS             1153 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Hungary    <EURHUF=  321.3000  321.1500    -0.05%    -0.07%
 forint     >                                       
 Polish     <EURPLN=    4.2810    4.2800    -0.02%    +0.20%
 zloty      >                                       
 Romanian   <EURRON=    4.7595    4.7556    -0.08%    -2.22%
 leu        >                                       
 Croatian   <EURHRK=    7.4290    7.4270    -0.03%    -0.26%
 kuna       >                                       
 Serbian    <EURRSD=  117.9000  118.0500    +0.13%    +0.34%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1088.07  1086.270    +0.17%   +10.29%
                                       0            
 Budapest             42389.51  42225.87    +0.39%    +8.31%
 Warsaw                2384.59   2391.80    -0.30%    +4.74%
 Bucharest             8301.39   8304.90    -0.04%   +12.43%
 Ljubljana  <.SBITOP    880.52    874.33    +0.71%    +9.48%
            >                                       
 Zagreb                1806.58   1805.33    +0.07%    +3.30%
 Belgrade   <.BELEX1    737.65    739.29    -0.22%    -3.16%
            5>                                      
 Sofia                  582.14    583.32    -0.20%    -2.07%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6530   -0.1610   +224bps    -16bps
            R>                                      
   5-year   <CZ5YT=R    1.6910   -0.0050   +216bps     -1bps
            R>                                      
   10-year  <CZ10YT=    1.8110    0.0000   +184bps     -1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6430   -0.1240   +223bps    -12bps
            R>                                      
   5-year   <PL5YT=R    2.2140   -0.0070   +268bps     -2bps
            R>                                      
   10-year  <PL10YT=    2.9050    0.0000   +293bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.15      2.19      2.18      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.34      0.50      0.68      0.16
                                                    
 Poland                   1.74      1.73      1.74      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
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 (Reporting by Sandor Peto, editing by Mike Harrison)
  
 
 
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