Bonds News

CEE MARKETS-Crown softer, Czechs may deliver first EU rate hike for years

    * Crown eases, but off one-month low as central bank meets
    * Czech bank seen lifting rates now, or in September
    * Hungarian bond auctions seen daring solid demand-trader
    * Polish president's fx bill pushes bank stocks lower

    By Sandor Peto and Jason Hovet
    BUDAPEST/PRAGUE, Aug 3 (Reuters) - The crown eased slightly
on Thursday ahead of a meeting where the Czechs may deliver the
European Union's first central bank interest rate hike for
several years.
    The crown traded at 26.115 against the euro at
0815 GMT, weaker from Wednesday but off Tuesday's one-month lows
of 26.172, while other Central European currencies were mixed. 
    Czech policymakers may deliver their first rate hike since
2008, and become the first EU central bank to embark on a new
tightening cycle in more than five years.
    A growing economy and signs of inflation will trigger a rate
rise unless concerns prevail that a bigger premium over euro
zone rates would attract too much hot capital inflow.
    A Reuters poll showed last week the bank was likely to raise
rates this quarter, with half of all analysts expecting
policymakers to move as soon as Thursday.
    Doubters of a hike so soon say the crown has firmed a good
clip since being set free from a currency cap of 27/euro in
April after three years of being kept artificially weak, and its
strengthening has tightened monetary conditions enough. 
    Uncertainty over how soon the European Central Bank will
drop its own ultra-loose policy of bond purchases may also cause
the Czechs to pause for now. 
    "I think the CNB is going to vote (on a hike proposal) and
(the count) might be close. I would be surprised though if it
hikes," a fixed income trader said.
    Czech bonds were bid a touch up, but have held up because of
continuing good demand from investors with euros able to still
get cheap crown financing and make profits parking money in debt
markets despite low yields.
    Bonds in Hungary, which have much higher yields than Czechs,
were flat and solid demand is expected at an auction on
Thursday, one Budapest-based trader said. 
    "The forint is also strong (near 26-month highs
against the euro), and people wonder if the central bank will do
something to weaken it," he said.
    A Reuters poll of analysts showed stronger than expected
courses for the region's currencies for the next 12 months, with
Europe's economic growth powering ahead.
    The Serbian central bank has repeatedly intervened against
its currency in the market this year, but the dinar
reached a new 22-month low on Thursday.
    Regional equities markets were quiet. 
    Polish bank stocks mostly eased slightly after
President Andrzej Duda submitted a draft bill to help troubled
foreign currency borrowers that would cost lenders up to about
3.2 billion zlotys ($890 million) per year.
               CEE MARKETS  SNAPSH   AT  1005 CET         
                            Latest  Previo  Daily   Change
                            bid     close   change  in
 Czech crown                26.115  26.103  -0.05%   3.42%
                                 0       0          
 Hungary                    303.36  303.59   +0.08   1.80%
 forint                         00      50       %  
 Polish zloty               4.2560  4.2576   +0.04   3.48%
 Romanian leu               4.5630  4.5616  -0.03%  -0.61%
 Croatian                   7.4065  7.4065   +0.00   2.01%
 kuna                                            %  
 Serbian                    119.49  119.70   +0.18   3.23%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            Latest  Previo  Daily   Change
                                    close   change  in
 Prague                     1014.0  1010.5   +0.34   +10.0
                                 6       9       %      3%
 Budapest                   36039.  36041.   +0.00   +12.6
                                48      13       %      1%
 Warsaw                     2362.1  2366.0  -0.16%   +21.2
                                 7       6              7%
 Bucharest                  8310.4  8299.2   +0.14   +17.3
                                 7       2       %      0%
 Ljubljana                  804.34  809.85  -0.68%   +12.0
 Zagreb                     1886.0  1886.1  -0.01%  -5.46%
                                 1       3          
 Belgrade                   706.55  707.17  -0.09%  -1.51%
 Sofia                      719.92  715.14   +0.67   +22.7
                                                 %      6%
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
   2-year                   -0.026  -0.026   +066b   -4bps
   5-year                    0.122       0   +034b   -1bps
   10-year                   0.898       0   +041b   -1bps
   2-year                    1.832   0.014   +252b   +1bps
   5-year                    2.699   0.001   +291b   -1bps
   10-year                   3.362   0.003   +287b   +0bps
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
 Czech Rep             <PR    0.55    0.67    0.77       0
 Hungary               <BU     0.2    0.28    0.31    0.15
 Poland                <WI   1.767     1.8    1.87    1.73
 Note: FRA     are for ask                                
 quotes        prices                               
 (Additional reporting by Bartosz Chmielewski in Warsaw)