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Alicja Ptak

CEE MARKETS-Polish bond yield sets 4-year low, currencies rise despite firm dollar

14 Jun 2019

* Bond yields track core markets lower on politics, growth worries * Poland's 10-year bond yield at lowest since early 2015 * Regional currencies set multi-month highs, stocks mostly ease * Currencies shrug off dollar rebound on U.S. retail sales data (Adds U.S. retail sales, new comments) By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, June 14 Poland's 10-year government bond yield sank to its lowest level in more than four years on Friday after an attack on two oil tankers in the Gulf, which the United States blamed on Iran, led to global buying of less risky assets. Tehran denied the allegation following the attacks on Thursday, but concerns grew about a new U.S.-Iranian confrontation. The Polish paper traded at 2.3895% at 0843 GMT, down 3 basis points from Thursday's close. "(There is a) big drop in yields worldwide, (and) the rising presence of foreign investors dragged (Polish) yields down," said Michal Zak, dealer at mBank. "Yesterday's (Polish government bond) auction apparently has not covered all positions, if only a day after we see a 10 basis point drop," he added, referring to the fall in yield from Thursday's peak. Other Central European bond yields also dropped, and currencies mainly firmed slightly, despite a rebound in U.S. yields and the dollar against major currencies, partly after better-then-expected U.S. retail sales data. In recent weeks, dollar sales have helped the region's main currencies to firm, and on Friday the zloty touched a 10-month high against the euro at 4.2525, and the Czech crown a 9-month high at 25.523. "The reverse correlation with the dollar does not work 100 percent. There is hardly any trade in local markets right now, this is a sleepy Friday," one Budapest-based dealer said. "After the retail figures... the first U.S. rate cut may come later, but the expectation is still for cuts." Despite a rise in U.S. Treasury bond yields, German yields remained lower, though the 10-year yield was off record lows touched earlier in the session. Although a surge in wages in the region is pushing consumer prices higher, Poland has the lowest annual inflation among Central Europe's main economies - revised up to 2.4 percent for May on Friday. Polish rate setter Jerzy Osiatynski said the central bank may need to start to increase its record low interest rates next year, but that in 2019 borrowing costs would not change. Hungary's 10-year yield was fixed lower by 5 basis points from Thursday's fixing at 2.74%. The forint firmed 0.1 percent to 321.8 versus the euro. CEE SNAPSHOT AT MARKETS 1517 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.5250 25.5600 +0.14% +0.71% crown > Hungary <EURHUF= 321.8000 322.1400 +0.11% -0.22% forint > Polish <EURPLN= 4.2559 4.2564 +0.01% +0.79% zloty > Romanian <EURRON= 4.7225 4.7215 -0.02% -1.45% leu > Croatian <EURHRK= 7.4120 7.4130 +0.01% -0.03% kuna > Serbian <EURRSD= 117.9200 118.0000 +0.07% +0.32% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1049.66 1050.880 -0.12% +6.40% 0 Budapest 40636.65 40469.80 +0.41% +3.83% Warsaw 2289.25 2300.20 -0.48% +0.55% Bucharest 8516.02 8477.19 +0.46% +15.34% Ljubljana <.SBITOP 871.72 870.12 +0.18% +8.39% > Zagreb 1897.72 1901.30 -0.19% +8.51% Belgrade <.BELEX1 724.20 729.35 -0.71% -4.92% 5> Sofia 579.80 578.71 +0.19% -2.47% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6150 0.0280 +230bps +5bps R> 5-year <CZ5YT=R 1.5410 0.0390 +214bps +4bps R> 10-year <CZ10YT= 1.5840 -0.0140 +183bps -1bps RR> Poland 2-year <PL2YT=R 1.5760 -0.0200 +226bps +1bps R> 5-year <PL5YT=R 1.9660 -0.0200 +257bps -2bps R> 10-year <PL10YT= 2.4070 -0.0450 +265bps -4bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.17 2.06 1.95 2.17 <PRIBOR= > Hungary 0.29 0.41 0.51 0.18 Poland 1.74 1.73 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Jason Hovet in Prague; Editing by Kirsten Donovan and Gareth Jones)

CEE MARKETS-Polish 10-year bond yield drops to 4-year low

14 Jun 2019

* Bond yields track core markets lower on politics, growth worries * Poland's 10-year bond yield at lowest since early 2015 * Regional currencies set multi-month highs, stocks mostly ease By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, June 14 Poland's 10-year government bond yield sank to its lowest level in more than four years on Friday after an attack on two oil tankers in the Gulf, which the United States blamed on Iran, led to global buying of less risky assets. Tehran denied the allegation following the attacks on Thursday, but concerns grew about a new U.S.-Iranian confrontation. The Polish paper traded at 2.3895% at 0843 GMT, down 3 basis points from Thursday's close. "(There is a) big drop in yields worldwide, (and) the rising presence of foreign investors dragged (Polish) yields down," said Michal Zak, dealer at mBank. "Yesterday's (Polish government bond) auction apparently has not covered all positions, if only a day after we see a 10 basis point drop," he added, referring to the fall in yield from Thursday's peak. Bucharest's government bond auction also drew robust demand on Thursday. Although a surge in wages in the region is pushing consumer prices higher, Poland has the lowest annual inflation in the region - revised up to 2.4 percent for May on Friday. Polish rate setter Jerzy Osiatynski said that the central bank may need to start to increase its record low interest rates next year, but in 2019 the cost of credit will not be changed. The corresponding Hungarian yield dropped 4 basis points from Thursday's fixing to 2.75%. "This is what we see recently: bonds are the first to react," one Budapest-based fixed income trader said, adding that worries over global economic growth and politics had pushed yields lower anyway in the past weeks. "All yields are coming down in the world, independent of government budgets and other local factors," the trader said. Bond yields in fast-growing central Europe are above those in the United States, where 10-year Treasuries traded around 2.067%, and well above the corresponding Bund yield which fell to record lows on Friday near -0.27%. Regional stocks mostly eased as worries over the U.S.-China trade war and mixed economic data from China weighed on global stock markets. The United States is due to release key retail sales and industrial production data later on Friday. If the U.S. figures are weak, they are likely to reinforce expectations for Federal Reserve interest rate cuts, which have led to dollar selling in the past weeks, boosting Central European currencies to multi-month highs. The dollar moved sideways against a basket of currencies on Friday and Central European units were also treading water. The zloty, however, touched a 10-month high against the euro at 4.253, and the Czech crown a 5-month high at 25.55. CEE SNAPSHOT AT MARKETS 1043 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.5620 25.5600 -0.01% +0.57% crown > Hungary <EURHUF= 321.8800 322.1400 +0.08% -0.25% forint > Polish <EURPLN= 4.2555 4.2564 +0.02% +0.80% zloty > Romanian <EURRON= 4.7225 4.7215 -0.02% -1.45% leu > Croatian <EURHRK= 7.4110 7.4130 +0.03% -0.01% kuna > Serbian <EURRSD= 117.8200 118.0000 +0.15% +0.41% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1046.99 1050.880 -0.37% +6.13% 0 Budapest 40279.81 40469.80 -0.47% +2.91% Warsaw 2285.58 2300.20 -0.64% +0.39% Bucharest 8482.64 8477.19 +0.06% +14.88% Ljubljana <.SBITOP 868.72 870.12 -0.16% +8.01% > Zagreb 1899.80 1901.30 -0.08% +8.63% Belgrade <.BELEX1 728.54 729.35 -0.11% -4.35% 5> Sofia 578.23 578.71 -0.08% -2.73% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6100 0.0240 +229bps +4bps R> 5-year <CZ5YT=R 1.5540 0.0530 +216bps +7bps R> 10-year <CZ10YT= 1.5840 -0.0140 +185bps +1bps RR> Poland 2-year <PL2YT=R 1.5970 0.0010 +228bps +2bps R> 5-year <PL5YT=R 1.9450 -0.0410 +256bps -3bps R> 10-year <PL10YT= 2.4000 -0.0520 +266bps -3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.17 2.06 1.95 2.17 <PRIBOR= > Hungary 0.29 0.44 0.57 0.18 Poland 1.74 1.73 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Jason Hovet in Prague; Editing by Kirsten Donovan)

CEE MARKETS-Forint leads easing with central bank seen holding fire

21 May 2019

By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, May 21 Central European currencies eased on Tuesday on global dollar buying, with the forint leading the way on growing expectations that rising inflation will not prompt a tightening of monetary policy in Hungary. The greenback attracted safe-haven buying due to a rise in Treasury yields and amid signs that Asian economies are feeling the pinch from the U.S.-China trade war. Expectations that eurosceptic parties may fare well in this week's elections for the European Parliament added to pressure on the euro, which in turn weighed on the most liquid currencies in the European Union's eastern wing - the Polish zloty and the Hungarian forint. They had shed 0.2% against the euro by 0911 GMT, trading at 4.3056 and 327.1, respectively. The forint touched a new 9-month low of 327.5 and edged closer to record lows set almost a year ago beyond 330. The fundamental cause of the currency's recent weakness has been doubts the dovish central bank (NBH) would fight a rise in inflation with tightening measures. A surge in wages and a rise in oil prices have accelerated inflation across Central Europe this year, prompting the NBH to raise one of its benchmark rates in March and the Czech central bank to raise its main rate early this month. However, both measures were regarded as a "dovish hike", which may not be followed up by any further tightening this year. The Hungarian central bank is not expected to tighten policy at its May 28 meeting, with many market participants also seeing no changes at the June meeting where it will discuss its fresh inflation report. Inflation in Poland is still within the central bank's (NBP) 1.5-3.5% target range, despite a rise to 2.2% in April. Polish corporate sector wages rose by an above-forecast annual 7.1% in April, according to data released on Tuesday. "We expect the upward trend to continue in the coming months," said Jakub Rybacki, economist at ING, citing an NBP survey of companies on their wage plans. Although the European Parliament elections are unlikely to affect markets in Hungary, one Budapest-based dealer said they may cause some political uncertainty in Poland. A possible opposition victory could galvanise supporters ahead of a general election later this year, while a likely low turnout may limit any impact, analysts have said. The region's stock markets and government bonds were mostly rangebound. Prague's main index shed 0.4 percent, driven by Vienna-listed bank Erste CEE SNAPSHOT AT MARKETS 1111 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7920 25.7930 +0.00% -0.33% crown > Hungary <EURHUF= 327.1000 326.4000 -0.21% -1.84% forint > Polish <EURPLN= 4.3056 4.2975 -0.19% -0.37% zloty > Romanian <EURRON= 4.7630 4.7610 -0.04% -2.29% leu > Croatian <EURHRK= 7.4270 7.4265 -0.01% -0.23% kuna > Serbian <EURRSD= 117.8700 117.9300 +0.05% +0.36% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1044.85 1049.340 -0.43% +5.91% 0 Budapest 39523.88 39630.71 -0.27% +0.98% Warsaw 2178.32 2175.51 +0.13% -4.32% Bucharest 8204.26 8205.08 -0.01% +11.11% Ljubljana <.SBITOP 862.46 866.03 -0.41% +7.24% > Zagreb 1857.57 1853.43 +0.22% +6.22% Belgrade <.BELEX1 732.87 733.41 -0.07% -3.78% 5> Sofia 568.05 569.37 -0.23% -4.44% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6110 0.0050 +225bps +0bps R> 5-year <CZ5YT=R 1.6770 0.0130 +219bps +2bps R> 10-year <CZ10YT= 1.8130 -0.0350 +190bps -3bps RR> Poland 2-year <PL2YT=R 1.6820 -0.0030 +232bps -1bps R> 5-year <PL5YT=R 2.2730 0.0040 +278bps +1bps R> 10-year <PL10YT= 2.9060 0.0060 +300bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.22 2.22 2.18 2.20 <PRIBOR= > Hungary 0.42 0.60 0.79 0.21 Poland 1.75 1.76 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Kirsten Donovan)

CEE MARKETS-Bond yields jump, zloty eases on Polish spending spree

25 Feb 2019

* Poland announces spending rise, CEE bond yields surge * Zloty touches 6-year low vs Czech crown * Crown buoyed by PPI jump, central banker Benda comments By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Feb 25 Central European sovereign bond yields jumped and the zloty set a six-year low against the Czech crown on Monday after Poland's ruling Law and Justice party (PiS) promised a spending spree. The PiS said it would increase public expenditure by up to $10 billion a year, raising child subsidies, pensions and spending on transport infrastructure. Hungarian Prime Minister Viktor Orban announced new benefits for families two weeks ago, and plans economic incentives to counter an economic slowdown elsewhere in the euro zone that has been holding back robust growth in Central Europe. Parties across Europe are looking ahead to European Parliament elections in May, and Poland is also due to hold a parliamentary election later this year. The yield on Poland's 10-year benchmark bond jumped above 3 percent before retreating to 2.75 percent by 1000 GMT, up 9 basis points from Friday. The new measures could boost Poland's budget deficit to 2.2-2.5 percent of economic output next year, against previous expectations of 1.9 percent, ING analyst said in a note. Bank Millennium analysts said the deficit could approach 3 percent, the European Union's limit, and may even exceed it in the long run. Hungary's 10-year yield rebounded to 2.69 percent from Friday's 2.62 percent. The rise may have been caused by a combination of technical factors and the impact of the Polish increase, Budapest-based ING analyst Peter Virovacz said. The size of Hungary's upcoming stimulus package is not known. Worries over the budget are unlikely, given that Fitch upgraded Hungary's sovereign rating just on Friday, a week after a similar move from S&P, he said. The forint was down a shade to 317.9 against the euro by 0946 GMT. The zloty shed 0.1 percent to 4.339, moving closer to the weak end of the past seven months' narrow 4.25-4.35 range. Against the crown, the zloty touched a six-year low at 5.8972. Last week it hit its weakest level against the forint since 2017. That divergence has been driven by expectations of monetary tightening in Budapest and Prague, while the Polish central bank is seen keeping rates on hold this year and beyond. Expectations of Czech rate hikes were reinforced by a strong 2.9 percent annual rise in industrial producer prices in January and comments from rate setter Vojtech Benda, who said a no-deal Brexit could prompt a rate hike. "Besides this (producer prices), the economy showed unusually strong growth in the last quarter," said Viktor Zeisel, head economist at Komercni Banka. "These are the reasons why we re-evaluated our expectations and now expect the CNB will raise rates at its March meeting." CEE SNAPSHOT AT MARKETS 1046 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6360 25.6390 +0.01% +0.28% crown > Hungary <EURHUF= 317.9000 317.7000 -0.06% +1.00% forint > Polish <EURPLN= 4.3390 4.3348 -0.10% -1.14% zloty > Romanian <EURRON= 4.7580 4.7604 +0.05% -2.19% leu > Croatian <EURHRK= 7.4300 7.4255 -0.06% -0.27% kuna > Serbian <EURRSD= 118.1000 118.2000 +0.08% +0.17% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1062.71 1060.230 +0.23% +7.72% 0 Budapest 40767.35 40814.60 -0.12% +4.16% Warsaw 2363.19 2355.77 +0.31% +3.80% Bucharest 7778.03 7766.87 +0.14% +5.34% Ljubljana <.SBITOP 844.46 849.61 -0.61% +5.00% > Zagreb 1775.09 1776.30 -0.07% +1.50% Belgrade <.BELEX1 683.42 684.61 -0.17% -10.28% 5> Sofia 585.64 582.49 +0.54% -1.48% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 2.0010 0.2040 +255bps +19bps R> 5-year <CZ5YT=R 1.8140 0.0170 +218bps +0bps R> 10-year <CZ10YT= 1.9240 0.0430 +181bps +2bps RR> Poland 2-year <PL2YT=R 1.6160 0.0450 +216bps +3bps R> 5-year <PL5YT=R 2.2390 0.0860 +260bps +7bps R> 10-year <PL10YT= 2.8580 0.1040 +274bps +8bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.24 2.28 2.29 2.02 <PRIBOR= > Hungary 0.35 0.55 0.75 0.15 Poland 1.73 1.73 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Jason Hovet in Prague; Editing by Kevin Liffey)

CEE MARKETS-Zloty rebounds vs forint after strong Polish retail data

21 Feb 2019

* Talk of a Polish rate cut fades as retail sales rise * Zloty rebounds from 16-month lows against forint (Recasts with Hungarian central bank poll, new comments) By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Feb 21 The Polish zloty rebounded against Hungarian forint on Thursday as investors saw an earlier fall on a divergence in monetary policies between the two countries as overdone. The Czech crown had made mild gains against the euro by 1452 GMT from an earlier easing, but otherwise Central European currencies were little changed against the single currency. The zloty retreated after initial gains following the release of figures showing strong 6.6 percent growth in Polish retail sales in January. But against its regional peer, the forint, it rebounded to 73.23 in bids from 16-month lows at 72.9282. "The two currencies started to diverge about a month ago when investors were encouraged (to buy the forint) by the story that Hungary can start to tighten monetary policy if core inflation rises," one Budapest-based trader said. "The zloty/forint cross was shunned for some time, but after yesterday's zloty plunge, we saw buyers appearing who found the zloty attractive at levels near 73.10-73.20," the trader added. The zloty's weakening beyond 4.3 versus the euro this month has been caused by global factors including worries over a slowdown in economic growth in the euro zone, dealers said. However, its underperformance against the forint has been caused by diverging monetary policies in the two countries, dealers and analysts said. According to a Reuters poll, many analysts expect a rise in core inflation to push the Hungarian central bank into starting to tighten policy in March. But Polish annual inflation, which ran at 0.9 percent in January, is well below the central bank's (NBP) 2.5 percent inflation target, does not suggest any monetary tightening at all this year, or even longer, market participants said. Comments from NBP Governor Adam Glapinski on Wednesday caused cracks in views that further rate cuts could be ruled out, sending the zloty down against the forint. "Glapinski suggested that this way of thinking (about no cut) is incorrect, as (in his opinion) there is a space to lower the interest rates without weakening the bank sector," said Jarosław Kosaty, fx strategist at PKO BP. Glapinski said that rates were "at such relative levels that we can cut them." "If we had a catastrophic (economic) downturn, then obviously we do still have room (for a rate cut)," he said, quoted by the Polish news agency PAP. He added, though, that there was no need to change rates because inflation was well anchored and that there will be no need to use non-standard tools during the current MPC’s term unless there is a "breakdown" in the surrounding of the Polish economy, which he did not expect. A rate cut is not the NBP's base scenario, PKO's Kosaty said. CEE SNAPSHOT AT MARKETS 1552 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6350 25.6570 +0.09% +0.28% crown > Hungary <EURHUF= 317.7500 317.1600 -0.19% +1.05% forint > Polish <EURPLN= 4.3366 4.3331 -0.08% -1.08% zloty > Romanian <EURRON= 4.7575 4.7530 -0.09% -2.18% leu > Croatian <EURHRK= 7.4160 7.4145 -0.02% -0.08% kuna > Serbian <EURRSD= 118.1500 118.2000 +0.04% +0.13% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1057.79 1068.070 -0.96% +7.22% 0 Budapest 40531.02 40582.83 -0.13% +3.56% Warsaw 2339.70 2369.70 -1.27% +2.77% Bucharest 7832.95 7749.20 +1.08% +6.08% Ljubljana <.SBITOP 849.21 844.77 +0.53% +5.59% > Zagreb 1773.53 1769.15 +0.25% +1.41% Belgrade <.BELEX1 680.63 670.79 +1.47% -10.64% 5> Sofia 578.35 576.50 +0.32% -2.71% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.9490 0.1320 +251bps +13bps R> 5-year <CZ5YT=R 1.7980 0.0300 +215bps +0bps R> 10-year <CZ10YT= 1.9070 0.0440 +177bps +1bps RR> Poland 2-year <PL2YT=R 1.5780 0.0280 +214bps +3bps R> 5-year <PL5YT=R 2.1700 0.0330 +252bps +0bps R> 10-year <PL10YT= 2.7650 0.0180 +263bps -2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.24 2.25 2.30 2.02 <PRIBOR= > Hungary 0.35 0.55 0.75 0.15 Poland 1.73 1.71 1.70 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Editing by Toby Chopra)

CEE MARKETS-Zloty hits 16-month low vs forint on dovish rate outlook

20 Feb 2019

* Zloty eases vs euro despite industrial output data * Also weakens against forint on monetary policy divergence * Bond yields fall ahead of Fed minutes, but for Romania (Adds zloty loss against forint, decline in government bond yields except for Romania) By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Feb 20 The zloty eased against the euro on Wednesday and hit a 16-month low against the forint as concerns about an economic slowdown in Europe offset data showing strong growth in Polish industrial output. Polish output grew by 6.1 percent in annual terms in January, contrasting with a gloomy PMI manufacturing activity survey for the same month released earlier. The zloty eased to its weakest levels against the euro since October at 4.3455 and was down 0.2 percent at 4.342 at 1408 GMT. In its cross with the Hungarian forint it touched its weakest level since October 2017, bid at 72.9282. While this week's Polish economic data did not change expectations for its central bank interest rates to stay low, possibly for years, Hungary's central bank could start to tighten its policy in the coming months. Among the key factors weighing on Central European currencies is the region's dependence on euro zone growth, which is now slowing, Bank of America-Merrill Lynch analysts said. "(Interest rate) hikes largely played out in both CZK rates and FX, and they may well never happen in Poland," the analysts said in a note, adding that Hungary was an exception, with its central bank "turning hawkish despite the global dovish turn". "PLN/HUF started moving lower, and the forint may continue stronger once the NBH moves in March," they said. Societe Generale analyst Marek Drimal said that it could make sense to initiate a hedge trade in the region in case the United States imposes tariffs on car imports from Europe. "In our view, Hungary and the Czech Republic would be the hardest hit, with Hungary looking more vulnerable in FX on a tactical basis," he said, adding that tariffs could also "delay, pause or slow" monetary policy tightening in Hungary. Hungarian government bonds joined a decline in yields ahead of the publication of minutes from the U.S. Federal Reserve's latest meeting. The country's 10-year yield was fixed lower by 6 basis points at 2.67 percent, while Poland's corresponding yield dropped 2 basis points to 2.64 percent. The Czech five-year yield dropped to 1.718 percent from Tuesday's two-month high at 1.759 percent despite a senior finance ministry official saying that a shortfall in tax revenue could widen the budget deficit this year. Romanian bonds bucked the trend, with the five-year yield bid higher by 6 basis points at 4.31 percent while the leu set a three-week low against the euro. CEE SNAPSHOT AT MARKETS 1508 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6790 25.6900 +0.04% +0.11% crown > Hungary <EURHUF= 317.2000 317.6500 +0.14% +1.22% forint > Polish <EURPLN= 4.3427 4.3330 -0.22% -1.22% zloty > Romanian <EURRON= 4.7565 4.7480 -0.18% -2.15% leu > Croatian <EURHRK= 7.4180 7.4125 -0.07% -0.11% kuna > Serbian <EURRSD= 118.1900 118.0700 -0.10% +0.09% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1067.18 1065.630 +0.15% +8.17% 0 Budapest 40662.80 40560.44 +0.25% +3.89% Warsaw 2341.77 2322.41 +0.83% +2.86% Bucharest 7710.96 7728.30 -0.22% +4.43% Ljubljana <.SBITOP 844.77 847.58 -0.33% +5.04% > Zagreb 1768.28 1767.47 +0.05% +1.11% Belgrade <.BELEX1 670.79 673.21 -0.36% -11.93% 5> Sofia 577.50 578.10 -0.10% -2.85% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8170 0.0160 +238bps +1bps R> 5-year <CZ5YT=R 1.7860 -0.0720 +217bps -7bps R> 10-year <CZ10YT= 1.8530 -0.0260 +176bps -2bps RR> Poland 2-year <PL2YT=R 1.5610 -0.0920 +213bps -10bps R> 5-year <PL5YT=R 2.1370 -0.0150 +252bps -2bps R> 10-year <PL10YT= 2.6610 -0.0030 +257bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.08 2.11 2.13 2.02 <PRIBOR= > Hungary 0.34 0.54 0.72 0.15 Poland 1.72 1.71 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest Editing by Susan Fenton and David Goodman)

CEE MARKETS-Output jump fails to lift zloty as Europe growth concerns bite

20 Feb 2019

* Polish Jan industrial output rises more than expected * Zloty eases despite recent solid Polish economic data * Euro zone growth slowdown weighs on CEE currencies * Polish 10-year bond yield tests more than 2-year low By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Feb 20 The zloty eased on Wednesday as broad concerns about an economic slowdown in Europe kept a lid on Central European currencies, offsetting data showing strong growth in Polish industrial output. Polish output grew 6.1 percent in annual terms in January, contrasting with a gloomy PMI manufacturing activity survey for the same month released earlier. Other Polish data, including Tuesday's corporate wage and employment figures, also suggested stronger-than-expected economic activity. Still, the zloty eased to its weakest levels against the euro since October at 4,3432. At 1009 GMT it traded at 4.3396, down 0.15 percent. The Czech crown and the Hungarian forint were both flat at 25.69 and 317.7 to the euro, respectively. While progress in China-U.S. trade talks boosted the yuan , various other factors drove down other emerging market currencies like the Turkish lira, the Russian rouble and the South African rand. "(At the beginning of the year) investors were euphoric, they wanted to take new positions and emerging markets were always working," said Marcin Zawislak, dealer at Santander Bank Polska. "Right now we see a correction." The key local factor weighing on Central European currencies is the region's dependence on growth in the euro zone which is slowing down, Bank of America-Merrill Lynch analysts said in a note. "(Interest rate) hikes largely played out in both CZK rates and FX, and they may well never happen in Poland," they said, adding that Hungary was an exception as the Hungarian central bank (NBH) "is turning hawkish despite the global dovish turn". "PLN/HUF started moving lower, and the forint may continue stronger once the NBH moves in March," they said. In Romania, new taxes on the energy and bank sectors and an economic slowdown as well as other policy changes have been additional drags on markets. The leu set a three-week low against the euro. Trading at 4.7575, it was down 0.2 percent, even though the overnight ROBOR interbank rate was the highest in months. Dealers, however, said that volatility in the leu was not unusually high. Romania's government altered judicial legislation via emergency decree on Tuesday, prompting criticism from the president that the move would weaken prosecutors while tightening political control over the judiciary. In equity markets, stocks were mixed, while government bond yields eased ahead of the publication of minutes from the U.S. Federal Reserve's latest meeting. Poland's 10-year bond yield tested its lowest levels since the middle of 2016, dropping by 2 basis points to 2.6455 percent. CEE SNAPSHOT AT MARKETS 1109 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.6900 25.6900 +0.00% +0.07% crown > Hungary <EURHUF= 317.7000 317.6500 -0.02% +1.07% forint > Polish <EURPLN= 4.3396 4.3330 -0.15% -1.15% zloty > Romanian <EURRON= 4.7575 4.7480 -0.20% -2.18% leu > Croatian <EURHRK= 7.4120 7.4125 +0.01% -0.03% kuna > Serbian <EURRSD= 118.1500 118.0700 -0.07% +0.13% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1068.20 1065.630 +0.24% +8.28% 0 Budapest 40461.57 40560.44 -0.24% +3.38% Warsaw 2335.07 2322.41 +0.55% +2.57% Bucharest 7741.91 7728.30 +0.18% +4.85% Ljubljana <.SBITOP 840.78 847.58 -0.80% +4.54% > Zagreb 1770.57 1767.47 +0.18% +1.24% Belgrade <.BELEX1 669.63 673.21 -0.53% -12.09% 5> Sofia 578.27 578.10 +0.03% -2.72% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.9520 0.1500 +252bps +15bps R> 5-year <CZ5YT=R 1.7860 -0.0720 +217bps -8bps R> 10-year <CZ10YT= 1.8550 -0.0240 +176bps -2bps RR> Poland 2-year <PL2YT=R 1.5560 -0.0970 +213bps -10bps R> 5-year <PL5YT=R 2.1550 0.0030 +254bps +0bps R> 10-year <PL10YT= 2.6730 0.0090 +258bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.08 2.11 2.13 2.02 <PRIBOR= > Hungary 0.36 0.55 0.74 0.15 Poland 1.73 1.72 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest Editing by Susan Fenton)

CEE MARKETS-Zloty drifts sideways after strong wage data

19 Feb 2019

* Stocks, currencies ease mildly on global trade concerns * Zloty bucks easing after strong wage, jobs figures By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Feb 19 The zloty bucked a mild easing of Central European currencies and stocks on Tuesday, taking support from stronger than expected growth in Poland's corporate wages and employment. Stocks in emerging markets fell as investors held their breath ahead of U.S.-China trade talks due this week, while in Europe a fear of U.S. tariffs on European car sales also weighed on sentiment. With U.S. markets not reopening yet after a long weekend, trade was thin and price changes muted in Central Europe, traders said. The region's equity indexes eased somewhat, led by the illiquid Belgrade bourse, whose index shed half a percent. Regional currencies also eased mildly, except for the zloty which was steady at 4.33 versus the euro. Polish corporate employment rose by 2.9 percent in annual terms in January and corporate wages jumped by 7.5 percent. Both figures were higher than expected, but were unlikely to change perceptions that the Polish central bank could keep interest rates at record lows possibly for years. ING analysts said in a note that this week's Polish economic data releases - which also include retail sales due on Thursday -- could support the zloty. The U.S.-China trade talks, which influence sentiment towards emerging markets, will remain the biggest threat to the zloty, they said. "If the negotiations between them fail, we expect a temporary increase of EURPLN above 4.35," they added. Polish and Hungarian government bond yields dropped slightly, tracking Bunds, after European Central Bank (ECB) chief economist Peter Praet said on Monday that the bank would reassess the outlook for bank lending. Germany's ZEW survey, showing that the economic growth outlook remained subdued, also suggested the ECB interest rates could remain low, which also means less pressure on central banks in the European Union's eastern wing to tighten policy. "A slow drift in yields and swaps lower remains the trend," one Budapest-based fixed income trader said. "The key will be how U.S. markets open." Hungary's 5-year bond yield dropped 5 basis points from Monday's fixing to 2.21 percent. CEE SNAPSHOT AT MARKETS 1040 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7400 25.7370 -0.01% -0.13% crown > Hungary <EURHUF= 318.2500 318.0500 -0.06% +0.89% forint > Polish <EURPLN= 4.3301 4.3302 +0.00% -0.94% zloty > Romanian <EURRON= 4.7480 4.7460 -0.04% -1.98% leu > Croatian <EURHRK= 7.4110 7.4155 +0.06% -0.01% kuna > Serbian <EURRSD= 117.9300 118.0000 +0.06% +0.31% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1062.97 1063.900 -0.09% +7.75% 0 Budapest 40526.96 40653.39 -0.31% +3.55% Warsaw 2326.62 2325.67 +0.04% +2.20% Bucharest 7742.38 7764.01 -0.28% +4.86% Ljubljana <.SBITOP 842.56 845.90 -0.39% +4.76% > Zagreb 1774.47 1773.77 +0.04% +1.47% Belgrade <.BELEX1 681.51 684.97 -0.51% -10.53% 5> Sofia 577.87 578.33 -0.08% -2.79% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.8840 0.0800 +246bps +9bps R> 5-year <CZ5YT=R 1.8040 0.0450 +221bps +6bps R> 10-year <CZ10YT= 1.9020 0.0130 +181bps +3bps RR> Poland 2-year <PL2YT=R 1.5680 0.0120 +215bps +2bps R> 5-year <PL5YT=R 2.1680 -0.0080 +257bps +1bps R> 10-year <PL10YT= 2.6970 -0.0080 +260bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.08 2.11 2.13 2.01 <PRIBOR= > Hungary 0.38 0.58 0.79 0.15 Poland 1.73 1.73 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, editing by Ed Osmond)

Pence, at summit, lashes out at Europeans over Iran

14 Feb 2019

WARSAW U.S. Vice President Mike Pence accused European powers on Thursday of undermining Washington's crack down on Iran by trying to break U.S. sanctions against Tehran, in remarks that were likely to further strain transatlantic relations. | Video

UPDATE 1-CEE MARKETS-Leu recovers, forint flat before central bank meets

28 Jan 2019

* Leu gains as ROBOR rates surge * Forint sets seventh-month high vs zloty * Hungarian central bank may signal cut in its FX swaps * Oil fall, Swiss franc mortgages plan knock down Warsaw shares (Adds failure of Romanian bond auction, new analyst comments, fall of Romanian and Polish stocks) By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Jan 28 The leu bucked a weakening of Central European currencies on Monday, rising from record lows as interbank interest rates jumped. Bucharest's overnight interbank interest rate started the new reserve period of banks at bids at 3.24 percent on Friday, jumping from 1.52 percent after Thursday's holiday in Romania, and stayed almost steady at 3.21 percent on Monday. Those "abnormally high" levels give some respite to the leu , ING analysts said in a note. The government rejected all bids at an auction of 2031-expiry bonds as government bond yields continued to edge up after rising more than 10 basis points on Friday. The 10-year bond traded around 5.17 percent, just below its highest level since July, when Romania's annual inflation rates were above 5 percent. It fell to 3.3 percent in December. But Romanian asset prices came under pressure from taxes on banks and energy firms. That raised concern over the business environment and, by linking the bank tax to interbank interest rate, confusion over monetary policy. The leu traded steady at 4.7675 versus the euro at 1425 GMT, The Czech crown shed 0.2 percent and the zloty eased 0.1 percent. In periods when Romania's short-term interbank rates are lower, the central bank can keep the leu between 4.75 and 4.8 to the euro with market interventions if the market environment does not deteriorate, the Erste analysts said. Elsewhere, the forint was also steady versus the euro and reached its highest level in almost seven months against the zloty a day before the Hungarian central bank's meeting. The bank is expected to keep interest rates on hold at its meeting on Tuesday, but some analysts expect it to signal a tightening in the liquidity it provides through its fx swaps. In equities markets, Romanian stocks remained under pressure, with Bucharest's main index falling 0.8 percent. Warsaw stocks shed even more, tumbling 1.8 percent. A fall in oil prices dragged down Polish oil group PKN Orlen by 3 percent, while bank stocks - including PKO BP , which shed 3.4 percent - are under pressure from government plans to help those holding Swiss franc mortgages, said Marcin Materna, head of research at DM Millennium. CEE SNAPSHOT AT MARKETS 1525 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7470 25.6890 -0.23% -0.16% crown > Hungary <EURHUF= 317.5500 317.5000 -0.02% +1.11% forint > Polish <EURPLN= 4.2930 4.2870 -0.14% -0.08% zloty > Romanian <EURRON= 4.7675 4.7669 -0.01% -2.38% leu > Croatian <EURHRK= 7.4260 7.4290 +0.04% -0.22% kuna > Serbian <EURRSD= 118.5000 118.4650 -0.03% -0.17% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1020.28 1023.100 -0.28% +3.42% 0 Budapest 41265.13 40944.82 +0.78% +5.43% Warsaw 2357.19 2398.74 -1.73% +3.54% Bucharest 6991.20 7053.67 -0.89% -5.32% Ljubljana <.SBITOP 834.53 833.51 +0.12% +3.76% > Zagreb 1762.90 1762.22 +0.04% +0.81% Belgrade <.BELEX1 699.20 699.70 -0.07% -8.20% 5> Sofia 574.81 573.33 +0.26% -3.31% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.7350 -0.0020 +232bps +0bps R> 5-year <CZ5YT=R 1.6930 0.0100 +201bps +0bps R> 10-year <CZ10YT= 1.8640 0.0300 +165bps +2bps RR> Poland 2-year <PL2YT=R 1.3870 0.0050 +197bps +1bps R> 5-year <PL5YT=R 2.1990 -0.0090 +252bps -2bps R> 10-year <PL10YT= 2.8040 -0.0100 +259bps -2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.07 2.11 2.12 2.00 <PRIBOR= > Hungary 0.29 0.51 0.75 0.15 Poland 1.72 1.73 1.73 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest, editing by Ed Osmond)

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