May 3, 2019 / 10:22 AM / in 20 days

CEE MARKETS-Hungary's forint firms ahead of Moody's review, CPI data

    * Forint regains some ground, Moody's may upgrade Hungary
    * Czech crown flattens after fall following CNB meeting
    * Government bond yields track Bunds higher, Poland closed

    By Sandor Peto
    BUDAPEST, May 3 (Reuters) - The forint regained some ground
against the euro on Friday ahead of a possible Moody's sovereign
rating upgrade and data due next week which may show a further
rise in inflation.
    The forint traded at 323.75 versus the euro at
0848 GMT, up 0.2 percent, drifting further off 5-month lows set
at 324.85 early on Thursday.
    The National Bank of Hungary (NBH) did not hint at any
further monetary tightening after its meeting on Tuesday,
despite a rise in inflation across Central Europe this year due
to a surge in wages and crude prices.
    In March it increased its overnight deposit rate slightly
and announced some tightening in forint liquidity, but it
dropped its earlier guidance for gradual tightening.
    On Thursday, the Czech central bank (CNB), delivering its
eighth rate hike in two years, said it did not envisage a
further rise in the coming year.
    Both banks referred to risks in the global economy that
could put a lid on inflation.
    The Czech crown fell after the CNB's comments, but
firmed a shade on Thursday to 25.699 versus the euro. The zloty
 was flat and the leu also strengthened
slightly, to 4.7555.
    Dealers and analysts said a possible upgrade in Hungary's
'Baa3' rating from Moody's had been mostly priced in by
Hungarian markets.
    "U.S. payroll figures due in the afternoon are more
important," one Budapest-based dealer said, adding that the
region's currencies including the forint could strengthen if the
U.S. data led to a dollar sell-off.
    Further forint swings are possible next week as Hungarian
April inflation figures due on May 9 may show a rise in the
annual rate above the NBH's 2-4 percent target range.
    "That could trigger expectations that the central bank would
do something... but if it does not even say anything, that could
send the forint into a fall," the dealer said.
    The recent rise in headline inflation is probably temporary
in some countries in the region, while Hungary, Poland and
Romania look resilient to weakness in the euro zone economies,
Raiffeisen analyst Stephan Imre said in a note.
     "We added long-end HGBs (Hungarian government bonds) to our
buying list, in addition to SERBGBs (Serbian bonds) and POLGBs
(Polish bonds); elsewhere we remained neutral," he said. 
    But government bond yields mostly rose in the region,
tracking Bunds, with Hungary's 10-year yield up 3 basis points
to 3.33 percent in early trade.
    Polish markets were closed for a national holiday.
    Budapest's blue chip stock index fell 0.5 percent as the
shares of oil group MOL and OTP Bank broke
through technical support levels. MOL reported slightly lower
than expected first-quarter earnings.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1048 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6990   25.7080    +0.04%    +0.03%
 crown      >                                       
 Hungary    <EURHUF=  323.7500  324.3500    +0.19%    -0.82%
 forint     >                                       
 Polish     <EURPLN=    4.2862    4.2860    -0.00%    +0.08%
 zloty      >                                       
 Romanian   <EURRON=    4.7555    4.7590    +0.07%    -2.13%
 leu        >                                       
 Croatian   <EURHRK=    7.4150    7.4133    -0.02%    -0.07%
 kuna       >                                       
 Serbian    <EURRSD=  117.8700  117.9800    +0.09%    +0.36%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1080.67  1083.500    -0.26%    +9.54%
                                       0            
 Budapest             42164.81  42366.82    -0.48%    +7.73%
 Warsaw                2319.08   2319.08    +0.00%    +1.86%
 Bucharest             8450.67   8450.07    +0.01%   +14.45%
 Ljubljana  <.SBITOP    886.87    887.95    -0.12%   +10.27%
            >                                       
 Zagreb                1837.34   1840.87    -0.19%    +5.06%
 Belgrade   <.BELEX1    746.01    744.04    +0.26%    -2.06%
            5>                                      
 Sofia                  572.27    572.12    +0.03%    -3.73%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.7300   -0.0370   +233bps     -3bps
            R>                                      
   5-year   <CZ5YT=R    1.7860    0.0420   +218bps     +3bps
            R>                                      
   10-year  <CZ10YT=    1.9170    0.0270   +187bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.7050    0.0000   +231bps     +1bps
            R>                                      
   5-year   <PL5YT=R    2.3740    0.0010   +277bps     -1bps
            R>                                      
   10-year  <PL10YT=    3.0360   -0.0070   +299bps     -3bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.23      2.25      2.26      2.05
            <PRIBOR=                                
            >                                       
 Hungary                  0.25      0.51      0.69      0.16
                                                    
 Poland                   1.75      1.77      1.81      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Reporting by Sandor Peto;
Editing by Alexander Smith)
  
 
 
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