March 25, 2020 / 10:54 AM / 12 days ago

CEE MARKETS-Stocks jump on U.S. stimulus, but virus crisis not over

    By Anita Komuves
    BUDAPEST, March 25 (Reuters) - Central European stock
markets rose, led by Prague, and regional currencies gained on
Wednesday as the United States agreed on $2 trillion economic
stimulus bill, lifting market sentiment around the world. 
    The stimulus package includes a large increase in
unemployment insurance and hundreds of billions of dollars to
aid companies harmed by the coronavirus.
    "It is too early to open the champagne bottles, the plateau
of the pandemic is well ahead of us," CIB bank said in a note.
"And we will only be able to assess the damage to the real
economy later." 
    Central European governments have also announced a series of
emergency measures recently to counter the economic blow from
lockdowns, production halts and disruption to business activity
and supply chains.
    The Czech, the Polish and the Romanian central banks have
cut their benchmark rates. The National Bank of Hungary left
interest rates unchanged on Tuesday, as expected, and announced
further steps to boost liquidity. It introduced a new fixed-rate
collateralised loan instrument with unlimited liquidity.

    The first tender of the new instrument will be held later on
    "This tool will be able to stabilize not only lending, but
also the government securities market ... and this is what we
have seen today," Deputy Governor Marton Nagy said, referring to
a drop in yields, especially at the long end of the yield curve
on Tuesday.
    Five- and 10-year government bond yields dropped in Hungary
by more than 50 basis points on Tuesday before the NBH's
announcements, anticipating the measures, analysts say. 
    Yields on the 10-year Hungarian bonds were up by 20 basis
points on Wednesday, an FI trader in Budapest said. 
    "The market is disappointed because what the NBH announced
is not proper QE, contrary to what is happening in neighboring
countries," he said.
    The Hungarian forint gained 0.57% on Wednesday and
was trading at 352.50 to the euro after slipping the day before
as a reaction to the NBH's measures.
    Elsewhere, the Czech crown was also up, gaining
0.5% and trading at 27.557 to the euro. The zloty
gained 0.66% and was trading at 4.576. The Romanian leu
 was stable. 
    The Czech Republic holds a bond auction on Wednesday with
results due after 1100GMT.
    "Today's bonds auction will be a first test of where demand
currently is," Komercni Banka trader Dalimil Vyskovsky said in a
    "The finance ministry is offering a set of three bonds ...
as the issuer seems to be trying to offer investors a wider
range of instruments to test where demand will be strongest."
    Czech bond yields were dipping on Wednesday after a drop
yesterday, correcting from a spike in the past few days.
    Regional stock indexes were up, with Prague's equities
jumping more than 7% by 0857 GMT. Budapest and Bucharest
 were up by 3% and Warsaw's stocks gained nearly

            CEE        SNAPSHOT    AT                         
            MARKETS               0957 CET            
                       Latest     Previous  Daily     Change
                       bid        close     change    in 2020
 Czech                   27.5570   27.6950    +0.50%    -7.71%
 Hungary                352.5000  354.5000    +0.57%    -6.06%
 Polish                   4.5761    4.6065    +0.66%    -6.99%
 Romanian                 4.8390    4.8445    +0.11%    -1.05%
 Croatian                 7.6090    7.6115    +0.03%    -2.15%
 Serbian                117.4900  117.5450    +0.05%    +0.07%
 Note:      calculated from                 1800 CET          
                       Latest     Previous  Daily     Change
                                  close     change    in 2020
 Prague                   851.78  794.7400    +7.18%   -23.65%
 Budapest               33758.50  32614.56    +3.51%   -26.74%
 Warsaw                  1494.06   1451.02    +2.97%   -30.51%
 Bucharest               7719.84   7472.17    +3.31%   -22.63%
 Ljubljana                739.98    706.27    +4.77%   -20.08%
 Zagreb                  1437.84   1403.99    +2.41%   -28.73%
 Belgrade   <.BELEX15     623.04    616.31    +1.09%   -22.28%
 Sofia                    432.07    418.88    +3.15%   -23.95%
                       Yield      Yield     Spread    Daily
                       (bid)      change    vs Bund   change
 Czech                                                spread
   2-year   <CZ2YT=RR     1.3210    0.0870   +192bps     +5bps
   5-year   <CZ5YT=RR     1.5120    0.0700   +199bps     +4bps
   10-year  <CZ10YT=R     1.5530   -0.0010   +185bps     -3bps
   2-year   <PL2YT=RR     0.9650    0.0320   +157bps     +0bps
   5-year   <PL5YT=RR     1.4220    0.0820   +190bps     +5bps
   10-year  <PL10YT=R     1.9420    0.1450   +224bps    +12bps
                       3x6        6x9       9x12      3M
 Czech Rep          <       0.69      0.40      0.35      1.76
 Hungary            <       0.45      0.42      0.33      0.55
 Poland             <       0.55      0.42      0.44      1.17
 Note: FRA  are for ask prices                                

 (Additional reporting by Jason Hovet in Prague and Alan
Charlish in Warsaw; editing by Larry King)
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