March 11, 2020 / 5:08 PM / a month ago

CEE MARKETS-Warsaw stocks lowest since 2009, strong demand for Czech bonds

 (Updates with stock losses, Czech bond auction)
    By Anita Komuves and Jason Hovet
    BUDAPEST/PRAGUE, March 11 (Reuters) - Warsaw's blue-chip
index slumped on Wednesday to its lowest since April 2009 as
central European stocks slipped further amid deepening worries
over the coronavirus outbreak, while investors also pushed into
Czech bonds.
    The region's currencies were a mixed bag, with the Czech
crown losing half a percent, staying under pressure as
markets weigh whether the central bank could reverse its recent
interest rate tightening as the economy comes under strain.
    Czech National Bank Governor Jiri Rusnok reiterated the bank
was ready to cut if needed, but now was not yet the time.
    Markets have priced in a steep five-plus rate cuts over the
next year, which analysts have called too aggressive.
    At a planned state bond auction, the Czech Finance Ministry
sold twice as much as originally planned, boosting its offer for
new bonds due 2031 as yields have come down sharply in the last
month.
    "Demand was strong again," a dealer said.
    On the equity front, Warsaw dropped 5.87%, continuing a
slide to bring its 2020 losses to 30%, amid growing nervousness
about the impact that the new virus, which has infected more and
more people around Europe, will have.
    The Bank of England cut rates by 50 bps on Wednesday and the
region's players are looking to Thursday's meeting of the
European Central Bank, expecting measures to ease the economic
fallout from the coronavirus outbreak.
    Regional central bank officials have said they were
assessing the economic damage caused by the virus but have sent
mixed messages about the need for rate cuts.  
    In Poland, two rate-setters said this week that it was time
to consider a rate cut, while a third called for a wait-and-see
strategy before changing rates.
    Recent "commentary by some central banks from the region
highlighted the stark divergence between central bankers' views
of rate stability and the market's implied easing, which now
expects a cut from most countries in the region at their next
meeting," Morgan Stanley wrote in a note. 
    The Polish zloty inched up 0.05% on Wednesday and
Hungary's forint lost less than 0.1%.
    
                   CEE      SNAPSHOT   AT                      
                   MARKETS            1729              
                                      CET               
                            CURRENCI                           
                            ES                          
                            Latest    Previou  Daily    Change
                                      s                 
                            bid       close    change   in 2020
 EURCZK  Czech     <EURCZK   25.7450  25.6175   -0.50%   -1.22%
 =       crown     =>                                   
 EURHUF  Hungary   <EURHUF  336.0500  335.790   -0.08%   -1.46%
 =       forint    =>                       0           
 EURPLN  Polish    <EURPLN    4.3166   4.3186   +0.05%   -1.39%
 =       zloty     =>                                   
 EURRON  Romanian  <EURRON    4.8189   4.8215   +0.05%   -0.63%
 =       leu       =>                                   
 EURHRK  Croatian  <EURHRK    7.5750   7.5455   -0.39%   -1.71%
 =       kuna      =>                                   
 EURRSD  Serbian   <EURRSD  117.6100  117.600   -0.01%   -0.03%
 =       dinar     =>                       0           
         Note:     calculated from             1800            
         daily                                 CET      
         change                                         
                                                               
                            Latest    Previou  Daily    Change
                                      s                 
                                      close    change   in 2020
 .PX     Prague               885.10  912.760   -3.03%  -20.66%
                                            0           
 .BUX    Budapest           36536.24  38380.6   -4.81%  -20.72%
                                            0           
 .WIG20  Warsaw    <.WIG20   1505.64  1599.48   -5.87%  -29.97%
                   >                                    
 .BETI   Buchares            8381.47  8722.11   -3.91%  -15.99%
         t                                              
 .SBITO  Ljubljan  <.SBITO    827.84   843.94   -1.91%  -10.59%
 P       a         P>                                   
 .CRBEX  Zagreb    <.CRBEX   1591.42  1665.47   -4.45%  -21.12%
                   >                                    
 .BELEX  Belgrade  <.BELEX    752.28   757.33   -0.67%   -6.16%
 15                15>                                  
 .SOFIX  Sofia     <.SOFIX    495.12   494.81   +0.06%  -12.85%
                   >                                    
                                                               
                            Yield     Yield    Spread   Daily
                            (bid)     change   vs Bund  change
                                                        in
         Czech                                          spread
         Republic                                       
 CZ2YT=    2-year  <CZ2YT=    1.7660  -0.0810   +272bp    -8bps
 RR                RR>                               s  
 CZ5YT=    5-year  <CZ5YT=    1.1450  -0.1040   +206bp   -13bps
 RR                RR>                               s  
 CZ10YT            <CZ10YT    1.1320  -0.0120   +188bp    -6bps
 =RR     10-year   =RR>                              s  
         Poland                                                
 PL2YT=    2-year  <PL2YT=    1.2330   0.0560   +219bp    +6bps
 RR                RR>                               s  
 PL5YT=    5-year  <PL5YT=    1.4830   0.1450   +240bp   +12bps
 RR                RR>                               s  
 PL10YT            <PL10YT    1.7130   0.1700   +246bp   +12bps
 =RR     10-year   =RR>                              s  
                   FORWARD                                     
                            3x6       6x9      9x12     3M
                                                        interba
                                                        nk
         Czech     <CZKFRA      1.82     1.39     1.08     2.34
         Rep       ><PRIBO                              
                   R=>                                  
         Hungary   <HUFFRA      0.64     0.58     0.55     0.67
                   ><BUBOR                              
                   =>                                   
         Poland    <PLNFRA      1.42     1.15     1.03     1.69
                   ><WIBOR                              
                   =>                                   
         Note: FRA quotes are for                              
         ask prices                                     
         *********************************************         
         *****************                              
                                                               
 
 (Additional reporting by Jason Hovet in Prague; Editing by
Sherry Jacob-Phillips, William Maclean)
  
 
 
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