April 29, 2020 / 10:04 AM / a month ago

CEE MARKETS-Stocks rise on easing of lockdowns, Hungary long-term bond yields fall on QE

    By Anita Komuves
    BUDAPEST, April 29 (Reuters) - Central European stocks
firmed on Wednesday as countries looked to ease coronavirus
lockdowns, while Hungarian long-term government bond yields
plunged after the central bank announced the terms of its
bond-buying programme.
    Blue-chip indexes in the region rose, with Budapest
and Warsaw both gaining more than 1%. Bucharest
edged up 0.4% while Prague gained 0.2%.
    "Global markets continue to be cautiously optimistic," CIB
Bank said in a note. "Markets are happy about the reopening but
also conscious of the dangers that the pandemic can accelerate
again."
    The National Bank of Hungary said on Tuesday that it would
launch its bond-buying programme and mortgage bond purchases on
May 4, focusing on buying papers with more than three years to
maturity. It said it would buy 10-year bonds next week.

    Deputy central bank governor Marton Nagy told reporters that
the NBH wanted to drive long-term yields lower.
    "We can see the curve flattening, yields are going down
aggressively since the NBH's announcement," a fixed income
trader in Budapest said. 
    Yields on 15-year government bonds were at 2.30% on Tuesday
morning, according to the trader. That is 50 basis points down
from the level before the central bank statement, according to
Refinitiv debt management agency data.
    Yields on 10-year bonds fell 40 basis points lower to 2.00%,
and 5-year bond yields were down 16 basis points at 1.40%,
traders said.
    The forint was up 0.48% and trading at 356.70
versus the euro at 0750 GMT. The currency regained some of its
strength after weakening in the previous session following the
announcement of the details of the NBH's QE programme.
    "FX markets still need to digest the details of the
announcement," a trader in Budapest said. 
    "The forint could be strengthening on the prospect of the
government lifting some of the lockdown measures next week," he
said, adding that a weakening dollar could stop the slow firming
of the currency.
    Hungary will begin easing parts of its coronavirus lockdown
on May 4, Prime Minister Viktor Orban said on Friday.
 
    Elsewhere, the Polish zloty was up 0.2% and
trading at 4.539 versus the euro. 
    Ratings agency S&P revised Hungary's outlook to stable from
positive on pandemic-related risks late on Tuesday and affirmed
its 'BBB/A-2' rating. S&P expects the Hungarian economy to
contract by 4% this year.
            CEE        SNAPSHOT    AT                         
            MARKETS               0950 CET            
                       CURRENCIE                              
                       S                              
                       Latest     Previous  Daily     Change
                       bid        close     change    in 2020
 Czech                   27.1600   27.1700    +0.04%    -6.36%
 crown                                                
 Hungary                356.7000  358.4000    +0.48%    -7.16%
 forint                                               
 Polish                   4.5390    4.5475    +0.19%    -6.23%
 zloty                                                
 Romanian                 4.8440    4.8425    -0.03%    -1.15%
 leu                                                  
 Croatian                 7.5620    7.5573    -0.06%    -1.54%
 kuna                                                 
 Serbian                117.5400  117.6550    +0.10%    +0.03%
 dinar                                                
 Note:      calculated from                 1800 CET          
 daily                                                
 change                                               
                                                              
                       Latest     Previous  Daily     Change
                                  close     change    in 2020
 Prague                   869.05  867.1600    +0.22%   -22.10%
 Budapest               34206.76  33808.22    +1.18%   -25.77%
 Warsaw                  1614.77   1594.25    +1.29%   -24.90%
 Bucharest               8223.24   8191.09    +0.39%   -17.58%
 Ljubljana                790.06    786.50    +0.45%   -14.67%
 Zagreb                  1578.38   1582.28    -0.25%   -21.76%
 Belgrade   <.BELEX15     656.48    656.02    +0.07%   -18.11%
            >                                         
 Sofia                    447.85    447.70    +0.03%   -21.17%
                                                              
                       Yield      Yield     Spread    Daily
                       (bid)      change    vs Bund   change
                                                      in
 Czech                                                spread
 Republic                                             
   2-year   <CZ2YT=RR     0.6850   -0.0100   +139bps     +1bps
            >                                         
   5-year   <CZ5YT=RR     0.8880   -0.0540   +156bps     -4bps
            >                                         
   10-year  <CZ10YT=R     1.3560    0.0760   +184bps    +10bps
            R>                                        
 Poland                                                       
   2-year   <PL2YT=RR     0.5900   -0.0040   +130bps     +1bps
            >                                         
   5-year   <PL5YT=RR     1.0330   -0.0020   +170bps     +2bps
            >                                         
   10-year  <PL10YT=R     1.4450    0.0030   +193bps     +2bps
            R>                                        
            FORWARD                                           
                       3x6        6x9       9x12      3M
                                                      interban
                                                      k
 Czech Rep          <       0.28      0.29      0.33      0.90
            PRIBOR=>                                  
 Hungary            <       1.18      1.11      1.07      1.10
            BUBOR=>                                   
 Poland             <       0.22      0.18      0.21      0.69
            WIBOR=>                                   
 Note: FRA  are for ask prices                                
 quotes                                               
 ***************************************************          
 ***********                                          
 

 (Additional reporting by Jason Hovet in Prague; Editing by
Pravin Char)
  
 
 
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