November 18, 2019 / 10:42 AM / 19 days ago

CEE MARKETS-Currencies weaker, stocks grind higher amid U.S.-China trade hope

    WARSAW, Nov 18 (Reuters) - Central European stocks pushed
higher on Monday although currencies were on the back foot with
investors cautiously awaiting developments in U.S.-China trade
talks and watching a Hungarian interest rate decision on Tuesday
where no change was expected.
    Last week saw reports that the trade talks had hit a snag
over how and when to reduce tariffs, and how much U.S.
agricultural products China would commit to buy, but state media
Xinhua said the countries had  "constructive talks" on trade in
a high-level phone call on Saturday.
    "It seems that market optimism was slightly subdued, because
again there were no real events following Trump's optimistic
narrative. So we remain in a demanding macro environment
influenced by the trade war," DM BOS analyst Konrad Ryczko wrote
in a note.
    The Polish zloty slipped 0.2% against the euro to
4.287. The Hungarian forint was down 0.3% at 334.45
and the Czech crown fell 0.1% to the weak side of
25.60.
    Stock markets grinded higher, led by a 0.7% rise in Budapest
 at 0950 GMT.
    Most central European economies reported slowing or
below-expectation third-quarter growth figures last week,
showing signs the slowdown in trade partners was starting to
have an effect on the region. Growth has been buoyed this year
by strong domestic demand.
    The National Bank of Hungary (NBH) is expected to keep
interest rates unchanged at its monthly policy meeting on
Tuesday. Central Europe's most dovish central bank left its base
rate at 0.9% and the overnight deposit rate at -0.05% in
October.
    Hungary's central bank governor Gyorgy Matolcsy told a
parliamentary committee hearing on Monday that average inflation
was seen within the central bank's target range around 3% this
year.
    Polish benchmark 10-year yields rose 2 basis
points to 2.12%, while Czech 10-year yields edged
just over 1 basis point higher to 1.481%.
    "We've got a bit higher yields across the curve ... the
explanation is very simple, we've got a similar tendency on core
markets," said Pekao economist Arkadiusz Urbanski.
    

                                CEE MARKETS        SNAPSHOT    AT                        
                                                                 1050 CET                
                                                   CURRENCIES                            
                                                   Latest      Previous        Daily     Change
                                                   bid         close           change    in 2019
 EURCZK=    Czech crown                            25.6020     25.5860         -0.06%    +0.41%
 EURHUF=    Hungary forint                         335.4500    334.5000        -0.28%    -4.28%
 EURPLN=    Polish zloty                           4.2870      4.2765          -0.24%    +0.06%
 EURRON=    Romanian leu                           4.7740      4.7702          -0.08%    -2.51%
 EURHRK=    Croatian kuna                          7.4370      7.4370          +0.00%    -0.36%
 EURRSD=    Serbian dinar                          117.2800    117.4500        +0.14%    +0.87%
            Note: daily change  calculated from                                1800 CET  
                                                                                         
                                                   Latest      Previous        Daily     Change
                                                               close           change    in 2019
 .PX        Prague                                 1084.28     1083.1100       +0.11%    +9.91%
 .BUX       Budapest                               43725.46    43384.63        +0.79%    +11.72%
 .WIG20     Warsaw                                 2236.84     2233.87         +0.13%    -1.75%
 .BETI      Bucharest                              9706.39     9692.51         +0.14%    +31.46%
 .SBITOP    Ljubljana                              881.36      880.68          +0.08%    +9.59%
 .CRBEX     Zagreb                                 1981.90     1977.48         +0.22%    +13.33%
 .BELEX15   Belgrade                               769.64      769.32          +0.04%    +1.04%
 .SOFIX     Sofia                                  553.29      553.88          -0.11%    -6.93%
                                                   BONDS                                 
                                                   Yield       Yield           Spread    Daily
                                                   (bid)       change          vs Bund   change in
            Czech Republic                                                               spread
 CZ2YT=RR   2-year                                 1.3900      0.0280          +202bps   +4bps
 CZ5YT=RR   5-year                                 1.1940      -0.0190         +178bps   -3bps
 CZ10YT=RR  10-year                                1.4810      0.0130          +180bps   +0bps
            Poland                                                                       
 PL2YT=RR   2-year                                 1.4060      0.0070          +204bps   +1bps
 PL5YT=RR   5-year                                 1.8390      0.0110          +242bps   +0bps
 PL10YT=RR  10-year                                2.1190      0.0190          +244bps   +1bps
                                FORWARD            RATE        AGREEMENT                 
                                                   3x6         6x9             9x12      3M interbank
            Czech Rep                              2.24        2.22            2.17      2.17
            Hungary                                0.27        0.32            0.36      0.00
            Poland                                 1.73        1.72            1.69      1.71
            Note: FRA quotes    are for ask prices                                       
            **************************************************************
                                                                                         
    
    
    
    

 (Reporting by Alan Charlish in Warsaw and Jason Hovet in
Prague; Editing by Maju Samuel)
  
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