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Sandor Peto

CEE MARKETS-Forint rebounds as central bank toughens monthly statement

10:58am EST

* Hungarian central bank shifts to more hawkish language * Forint reverses earlier weakening, 10-year yield retreats * Zloty eases, wage growth not seen making cbank more hawkish * Warsaw stocks rise, Bucharest shares retreat (Recasts with Hungarian central bank decision and statement) By Sandor Peto BUDAPEST, Dec 18 The forint recouped ground lost in the past days after Hungary's central bank (NBH) removed a clause referring to maintaining loose monetary conditions from its monthly statement on Monday. It kept its main rate at Central Europe's lowest level, a record-low 0.9 percent. But its statement became more hawkish, clarifying that domestic core inflation figures will guide its policy even if the European Central Bank postpones the start of its own interest rates expected for the autumn of 2019, analysts said. "They (the NBH) made it clear that they are guided by data. They hold the start pistol, watch data, and they will shoot when the time comes," said Peter Virovacz of ING in Budapest. The forint firmed more than 0.1 percent against the euro to 322.8 by 1504 GMT, reversing an early weakening and reaching a 5-day high. It has eased in the past few days amid doubts that the bank would provide clues about future monetary tightening. "The fall in crude prices (in the fourth quarter) and the worries over (global) economic growth managed to release the bank from under pressure," one Budapest-based fixed income trader said. The NBH, while shifting to more hawkish language, made no change in its fx swap tool through which it manages liquidity in markets and the short-term BUBOR interbank interest rates. "This means, the market has not been surprised too much and the bank will not really do anything in the next quarter," the trader said. "Tomorrow's Fed meeting will be more interesting, before the market goes into Christmas mode," the trader added. Hungary's 10-year government bond yield retreated from early highs, to trade around 3.23 percent. Poland's corresponding yield dropped 3 basis points from Monday to 2.888 percent, off a 2-year low set at 2.867 percent earlier in the session. While the forint firmed, the zloty eased slightly to 4.2842 against the euro. Polish data which showed continued fast growth in wages did not change expectations that the Polish central bank will keep monetary conditions loose next year. Equity indices were mixed in Central Europe. Warsaw gained 1.25 percent, while Bucharest shares shed 1.2 percent, narrowing this years performance gap. Warsaw, by far the biggest stock exchange in the region, x has eased more than 6 percent since the end of 2017, knocked down by capital flows into the dollar from emerging markets. Bucharest, an earlier regional underperfomer has gained 8.7 percent this year. CEE SNAPSHOT AT MARKETS 1604 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.7580 25.7680 +0.04% -0.84% crown > Hungary <EURHUF= 322.8000 323.2500 +0.14% -3.68% forint > Polish <EURPLN= 4.2842 4.2820 -0.05% -2.52% zloty > Romanian <EURRON= 4.6465 4.6480 +0.03% +0.71% leu > Croatian <EURHRK= 7.4200 7.4035 -0.22% +0.14% kuna > Serbian <EURRSD= 118.4400 118.3800 -0.05% +0.05% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1025.10 1027.870 -0.27% -4.92% 0 Budapest 39524.72 39675.76 -0.38% +0.37% Warsaw 2310.47 2281.87 +1.25% -6.12% Bucharest 8425.20 8524.69 -1.17% +8.66% Ljubljana <.SBITOP 796.79 793.86 +0.37% -1.19% > Zagreb 1747.42 1744.58 +0.16% -5.18% Belgrade <.BELEX1 753.68 746.93 +0.90% -0.81% 5> Sofia 592.46 591.24 +0.21% -12.55% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6450 0.0310 +225bps +3bps R> 5-year <CZ5YT=R 1.8240 0.0300 +209bps +3bps R> 10-year <CZ10YT= 2.0340 0.0260 +178bps +3bps RR> Poland 2-year <PL2YT=R 1.4070 -0.0070 +201bps -1bps R> 5-year <PL5YT=R 2.3210 -0.0540 +259bps -5bps R> 10-year <PL10YT= 2.9070 -0.0220 +265bps -2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.18 2.27 2.34 2.02 <PRIBOR= > Hungary 0.30 0.53 0.80 0.13 Poland 1.75 1.77 1.78 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, editing by Richard Balmforth)

CORRECTED-CEE MARKETS-Currencies weaken, Hungarian central bank seen holding fire

7:17am EST

(Corrects par 5 to November inflation not December) * Hungarian central bank is expected to keep rates at record lows * Hungarian 10-year bond spread over Poland widens further * Kuna sets December low after central bank intervention By Sandor Peto BUDAPEST, Dec 18 Central European currencies eased before a meeting of the Hungarian central bank that's expected to keep its benchmark interest rate at a record-low 0.9 percent. Many investors expect the Federal Reserve to signal an economic slowdown at its Dec. 18-19 meeting, but Tuesday's Polish data showed continued fast growth in wages were not expected to lead to a more hawkish monetary policy stance in Warsaw, either. Central European currencies including the forint and the zloty slipped against the euro, falling less than 0.1 percent by 0948 GMT in slow trade. Some analysts have said the Hungarian central bank may provide markets with some clues about a slow monetary tightening next year. A bigger-than-expected retreat in annual headline inflation to 3.1 percent in November has reduced the likelihood of hawkish comments from the meeting, dealers said. A fixed income trader said rate setters "can sit back" after a decline in crude prices in the fourth quarter. "I do not think that they will issue any hawkish comment," the trader said. Hungarian government bond yields as well as yields in interest rate swaps and forward rate agreements extended Monday's rebound after a sharp decline in recent months. The yield of the 10-year government bond at 3.26 percent offered the highest spread over the corresponding Polish yield for over a month. The Polish 10-year yield, which had fallen less in the past months, tracked a fall in Bunds and U.S. Treasuries, and at 2.888 percent it set a new two-year low. The Czech 10-year yield, bid at 1.948 percent, was flat. A recent decline in Czech market yields has mis-priced the magnitude of likely further central bank rate increases, Societe Generale analysts said in a note. The bank could keep rates on hold at its meeting on Thursday, but its "statement might be more hawkish than the market currently expects given the relatively weak CZK (crown) and ever strengthening demand pressures to inflation," they said. The kuna traded at its weakest levels this month, at 7.405 versus the euro, off last week's five-month highs. Croatia's central bank bought 458 million euros on Monday in its second big market intervention in December. CEE SNAPSHOT AT MARKETS 1048 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.7810 25.7680 -0.05% -0.93% crown > Hungary <EURHUF= 323.4200 323.2500 -0.05% -3.87% forint > Polish <EURPLN= 4.2849 4.2820 -0.07% -2.53% zloty > Romanian <EURRON= 4.6500 4.6480 -0.04% +0.64% leu > Croatian <EURHRK= 7.4050 7.4035 -0.02% +0.34% kuna > Serbian <EURRSD= 118.4400 118.3800 -0.05% +0.05% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1021.98 1027.870 -0.57% -5.21% 0 Budapest 39553.54 39675.76 -0.31% +0.45% Warsaw 2289.34 2281.87 +0.33% -6.98% Bucharest 8412.99 8524.69 -1.31% +8.50% Ljubljana <.SBITOP 794.57 793.86 +0.09% -1.46% > Zagreb 1743.16 1744.58 -0.08% -5.41% Belgrade <.BELEX1 749.01 746.93 +0.28% -1.42% 5> Sofia 588.09 591.24 -0.53% -13.19% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6340 0.0200 +225bps +3bps R> 5-year <CZ5YT=R 1.7930 -0.0020 +208bps +2bps R> 10-year <CZ10YT= 1.9480 0.0000 +172bps +2bps RR> Poland 2-year <PL2YT=R 1.3770 -0.0370 +199bps -3bps R> 5-year <PL5YT=R 2.3170 -0.0580 +260bps -4bps R> 10-year <PL10YT= 2.8960 -0.0330 +266bps -1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.18 2.27 2.34 2.02 <PRIBOR= > Hungary 0.29 0.50 0.78 0.13 Poland 1.75 1.77 1.79 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, editing by Larry King)

CEE MARKETS-Forint firms, Hungary/Poland yield spread widens

Dec 17 2018

* Forint a tad firmer, Hungarian cbank may hint at tightening * Polish 10-year yield near 2-year low ahead of net CPI data * Czech annual industrial PPI picks up despite crude price fall By Sandor Peto BUDAPEST, Dec 17 The forint firmed modestly on Monday, a day before a meeting of the Hungarian central bank (NBH) that may provide some clues about future monetary tightening. Hungary's 10-year government bond yield, meanwhile, trading at 3.25 percent, offered the highest premium over Poland's corresponding paper in more than a month. The Polish yield was flat at 2.92 percent, a tad above 2-year lows reached on Friday, ahead of November Polish net inflation data due at 1300 GMT. Analysts expect a decline in annual net inflation to 0.7 percent from 0.9 percent, well below the Polish central bank's (NBP) 2.5 percent headline inflation goal. The figures could reinforce expectations that the bank will keep rates at record lows next year and possibly even longer. Along with Polish wage, output and retail sales data due before Christmas, "their overall tone should be quite 'dovish'," especially if German and U.S. data also suggest a bleaker economic outlook for 2019, Santander Bank analysts said in a note. The Hungarian central bank is seen keeping its benchmark interest rate, the region's lowest, at a record low of 0.9 percent at its meeting on Tuesday, according to the unanimous forecast of analysts in a Reuters poll. But the bank is seen allowing the short-term BUBOR interbank interest rates to rise slowly next year. It will discuss its quarterly inflation report at the meeting which gives it a chance to flag any future policy change, analysts said. The forint firmed 0.1 percent to 323.5 against the euro by 0934 GMT. Trade was thin and the currency was weaker then its 30-day moving average of 322.67. Hungarian government bond yields were steady after some rebound last week which followed two months of declines as a fall in global crude prices alleviated earlier inflation concerns. Czech data released on Monday showed a pick-up in the industrial producer price index in November to 3.9 percent from 3.7 percent in October, despite the fall in crude prices. Czech central bank board member Vojtech Benda said last week a weaker-than-expected crown was one reason to discuss another interest rate hike at the bank's Dec. 20 meeting. The crown traded a shade weaker at 25.79 against the euro, off Friday's 10-week high of 25.72. "We expect that a majority of MPC members (including the governor) will opt to wait with the rate hike until February in order to see a rebound of inflation and CZK development," Erste analysts said in a note. CEE SNAPSHOT AT MARKETS 1034 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.7900 25.7850 -0.02% -0.96% crown > Hungary <EURHUF= 323.5000 323.8400 +0.11% -3.89% forint > Polish <EURPLN= 4.2901 4.2910 +0.02% -2.65% zloty > Romanian <EURRON= 4.6555 4.6553 -0.00% +0.52% leu > Croatian <EURHRK= 7.3960 7.3902 -0.08% +0.46% kuna > Serbian <EURRSD= 118.6000 118.4500 -0.13% -0.08% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1029.46 1028.400 +0.10% -4.52% 0 Budapest 39853.94 40125.72 -0.68% +1.21% Warsaw 2300.08 2303.41 -0.14% -6.55% Bucharest 8547.31 8574.48 -0.32% +10.23% Ljubljana <.SBITOP 792.61 797.02 -0.55% -1.71% > Zagreb 1741.06 1734.00 +0.41% -5.52% Belgrade <.BELEX1 751.24 745.55 +0.76% -1.13% 5> Sofia 589.60 589.60 +0.00% -12.97% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6600 0.0710 +227bps +8bps R> 5-year <CZ5YT=R 1.8260 0.0500 +210bps +5bps R> 10-year <CZ10YT= 1.9680 0.0000 +171bps +0bps RR> Poland 2-year <PL2YT=R 1.4130 -0.0100 +202bps +0bps R> 5-year <PL5YT=R 2.3690 0.0040 +264bps +0bps R> 10-year <PL10YT= 2.9340 0.0020 +268bps +0bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.19 2.28 2.34 2.02 <PRIBOR= > Hungary 0.31 0.54 0.84 0.13 Poland 1.76 1.78 1.80 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto Editing by Gareth Jones)

CEE yields seen rising but global slowdown a major risk: Reuters poll

Dec 13 2018

BUDAPEST Central European long-term government bond yields will increase over the coming year due to a likely pick-up in inflation and yield rises in the United States and the euro zone, a Reuters poll of 19 analysts showed.

CEE MARKETS-Stocks rebound, crown eases despite rate hike suggestion

Dec 12 2018

* Warsaw stocks rebound from 2-week low on global stock rise * Czech cbanker Benda suggests 5th straight rate hike in Dec * Britain's leadership crisis weighs on mood in markets * Regional CPI decline pushed Polish 10-year yield below 3 pct By Sandor Peto BUDAPEST, Dec 12 Warsaw led a rise of Central Europe's main stock indices on Wednesday as U.S. President Donald Trump generated optimism about a trade deal with China, helping global equities markets. Warsaw's bluechip share index rose 0.8 percent by 0905 GMT, rebounding from a 2-week low reached in the previous session, led by PKO, Poland's biggest lender. The Czech crown eased to 25.86 versus the euro, remaining weaker than its 200-day moving average of 25.7, even though board member Vojtech Benda said the Czech central bank may need to follow up its four consecutive rate hikes with another one at its Dec. 20 meeting. Benda told Reuters that the weakness of the crown justified discussing another hike. Worries over Britain's European Union exit deal generally weighed on mood and trade interest in the region's other markets after lawmakers in Prime Minister Theresa May's own party triggered a confidence vote in her leadership. The terms of Brexit are closely watched in central Europe due to trade links with Britain and the exposure of the region's heavyweight vehicle industry. Investors were also holding their breath ahead of the Federal Reserve's Dec. 18-19 meeting, which could cause upset if it suggests that a sharp fall in debt yields in the region in the past months was overdone. The decline was fuelled by a retreat in inflation, driven by a fall in crude prices. However, U.S. Treasury yields and the dollar's appeal remain key factors in EU emerging markets. Bulgaria was the latest to report a fall in inflation, releasing a 3.1 percent annual figure for November on Wednesday, down from 3.7 percent a month earlier. Government bonds and currencies were mixed and rangebound in the region. The dinar firmed 0.1 percent ahead of the publication of Serbian inflation data later in the day. The leu eased while the forint and the zloty firmed a shade against the euro. Elsewhere, Hungarian bond yields rose by about 2 basis points, with the 10-year paper trading around 3.18 percent, as investors were monitoring Britain's leadership crisis, one Budapest-based fixed income trader said. Despite the uncertainty, lower-than-expected November inflation data from the region supports a decline in Poland's government bond yields, Santander Bank analysts said in a note. Poland's 10-year yield pierced 3 percent on Tuesday and hovered in a tight range around that psychological line on Wednesday, near its lowest levels since 2016. "Today we expect the Polish yield curve to go even lower, especially on the long end," Santander Bank said. CEE SNAPSHOT AT MARKETS 1005 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8600 25.8400 -0.08% -1.23% crown > Hungary <EURHUF= 323.6500 323.8000 +0.05% -3.93% forint > Polish <EURPLN= 4.2986 4.3015 +0.07% -2.84% zloty > Romanian <EURRON= 4.6585 4.6565 -0.04% +0.46% leu > Croatian <EURHRK= 7.3850 7.3885 +0.05% +0.61% kuna > Serbian <EURRSD= 118.2600 118.3900 +0.11% +0.20% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1021.37 1017.360 +0.39% -5.27% 0 Budapest 39896.12 39860.23 +0.09% +1.32% Warsaw 2238.46 2221.37 +0.77% -9.05% Bucharest 8559.40 8581.09 -0.25% +10.39% Ljubljana <.SBITOP 803.27 806.98 -0.46% -0.39% > Zagreb 1706.81 1708.83 -0.12% -7.38% Belgrade <.BELEX1 750.59 752.04 -0.19% -1.21% 5> Sofia 593.21 593.21 +0.00% -12.43% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6250 0.0080 +222bps +1bps R> 5-year <CZ5YT=R 1.7790 0.0070 +206bps +1bps R> 10-year <CZ10YT= 2.0320 0.0000 +179bps -1bps RR> Poland 2-year <PL2YT=R 1.5370 0.0000 +214bps +0bps R> 5-year <PL5YT=R 2.4490 0.0150 +273bps +2bps R> 10-year <PL10YT= 3.0170 0.0150 +277bps +1bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.13 2.23 2.27 2.01 <PRIBOR= > Hungary 0.31 0.54 0.84 0.13 Poland 1.76 1.76 1.78 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto Editing by Mark Heinrich)

CEE MARKETS-Inflation fall weakens currencies, lifts bonds

Dec 11 2018

* Hungarian, Romanian inflation falls below forecasts * Declining CPIs put pressure on currencies, bond yields * Romania's two-year bond yield is lowest since May By Sandor Peto BUDAPEST, Dec 11 Central European currencies mostly weakened and government bonds gained after Hungary and Romania reported lower-than-projected inflation, raising the prospect of less monetary policy tightening in the region. Turmoil over Britain's European Union exit and caution ahead of the European Central Bank's meeting on Thursday kept a lid on activity in markets. The forint got stuck near its 100-day moving average of 323.4 per euro, little changed from Monday, after the statistics office reported annual inflation slowed to 3.1 percent in November from October's 3.8 percent. The figure, the lowest since June, was below analysts' 3.5 percent forecast. Romanian inflation, also released on Tuesday, fell to 3.4 percent, dropping to this year's lowest level from 4.3 percent in October. Forecasts had been for 3.7 percent. "The Fed and the ECB also seem to turn towards not tightening policy -- we (in Hungary) can forget any rate hike for years now," one Budapest-based currency dealer said. The Hungarian central bank is widely expected to leave interest rates unchanged at its meeting next week, but some market participants see forint liquidity in interbank markets tightening and short-term market interest rates rising slowly next year. Views remain split over the future course of Hungarian rates. Some underlying indicators, like a pick-up in services and durable consumer goods inflation, still point towards monetary tightening, ING analyst Peter Virovacz said in a note. Core inflation, excluding food and fuel prices, was steady at 2.6 percent, below the National Bank of Hungary's 3 percent target. A retreat in global crude prices in the past two months has reduced inflation rates and pressure on currencies and government debt prices in Central Europe's fast-growing economies. Polish inflation, reported earlier, was also below expectations. The zloty fell 0.1 percent against the euro, testing the 4.3 line. Poland's 10-year bond yields struggled to break through 3 percent. Hungarian and Romanian yields dropped further. Romania's two-year benchmark yield dropped 3 basis points to 3.44 percent, the lowest since May, after a tender of two-year debt drew healthy demand on Monday. "The below-expectations inflation data for November could re-ignite the buying spree for Romanian government bonds," Bucharest-based ING analyst Ciprian Dascalu said in a note. Regional stock markets were mixed. A 2.7 percent gain by OTP Bank shares helped Budapest's main index rise 1.4 percent. Prague shed 1.2 percent, mainly because of a fall in Austrian-Based Erste bank's shares. CEE SNAPSHOT AT MARKETS 1047 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8550 25.8510 -0.02% -1.21% crown > Hungary <EURHUF= 323.5000 323.5600 +0.02% -3.89% forint > Polish <EURPLN= 4.2989 4.2939 -0.12% -2.85% zloty > Romanian <EURRON= 4.6530 4.6512 -0.04% +0.57% leu > Croatian <EURHRK= 7.3850 7.3875 +0.03% +0.61% kuna > Serbian <EURRSD= 118.3000 118.3200 +0.02% +0.17% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1017.85 1029.110 -1.09% -5.59% 0 Budapest 39770.31 39238.44 +1.36% +1.00% Warsaw 2236.27 2242.10 -0.26% -9.14% Bucharest 8579.33 8558.55 +0.24% +10.65% Ljubljana <.SBITOP 806.35 806.13 +0.03% -0.00% > Zagreb 1711.09 1705.20 +0.35% -7.15% Belgrade <.BELEX1 744.75 741.41 +0.45% -1.98% 5> Sofia 591.92 593.16 -0.21% -12.63% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6000 -0.0200 +217bps -3bps R> 5-year <CZ5YT=R 1.7810 0.0140 +203bps -1bps R> 10-year <CZ10YT= 2.0180 -0.0150 +175bps -5bps RR> Poland 2-year <PL2YT=R 1.5450 -0.0130 +211bps -3bps R> 5-year <PL5YT=R 2.4520 0.0060 +270bps -2bps R> 10-year <PL10YT= 3.0130 0.0030 +274bps -3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.13 2.23 2.27 2.01 <PRIBOR= > Hungary 0.30 0.54 0.84 0.13 Poland 1.75 1.78 1.78 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest, editing by Larry King)

CEE MARKETS-Brexit, growth uncertainty put pressure on CEE assets

Dec 10 2018

* Czech inflation drops, CNB seen increasing rates next year * Crown sets five-week highs, Brexit fears keep investors cautious * Croatian central bank could continue to sell kuna -analysts (Recasts with worries over Britain's EU exit deal, new analyst comments, Hungarian bond yield rise) By Sandor Peto and Igor Ilic BUDAPEST/ZAGREB, Dec 10 Central European currencies and stocks came under pressure on Monday as worries grew over global economic growth and the terms of Britain's exit from the European Union. The sterling fell on reports that British Prime Minister Theresa May would delay a parliamentary vote on "Brexit". Brexit without a deal would pose risks to the EU's eastern members because of their trade links with Britain and indirectly via Germany, whose companies own a big part of Central Europe's heavy car industry. A political crisis in Britain would also hit sterling, putting pressure on Central European, Rabobank analyst Piotr Matys said in a note. "A sharp fall in GBP/USD could squeeze EUR/PLN towards recent high at 4.3382 and USD/PLN could rise to around 3.81 where recent tops are located," he said. The zloty and the forint were steady versus the euro, which was moving sideways before Thursday's European Central Bank meeting. The zloty, trading at 4.2901, drifted further off last week's two-month highs. The leu eased 0.1 percent to 4.652 against the euro and the crown gave up ground, trading flat at 25.877, off a five-week high of 25.844 reached early in the session. Expectations for further Czech central bank interest rate hikes prevailed despite a drop in annual inflation in November to 2 percent, the bank's target level, from 2.2 percent in October. Inflation pressure remains strong, despite the fall, and will require tighter monetary conditions next year, Erste analysts said in a note. Central European equities were mostly lower on fears of a global economic slowdown, with Warsaw's blue-chip index shedding 1.2 percent. Pressure on some of the region's central banks to increase interest rates has eased in the past two months as global crude prices fell, helping government bond yields fall. "The crude slump has rewritten expectations. People are waiting," one Budapest-based fixed income trader said, adding that Hungary's central bank could keep its rates on hold at its meeting on Dec. 18. Hungary's 10-year government bond yield rose 7 basis points to 3.16 percent from a 6-month low reached on Friday. CEE SNAPSHOT AT MARKETS 1542 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8770 25.8780 +0.00% -1.29% crown > Hungary <EURHUF= 323.1800 323.1800 +0.00% -3.80% forint > Polish <EURPLN= 4.2901 4.2910 +0.02% -2.65% zloty > Romanian <EURRON= 4.6520 4.6464 -0.12% +0.60% leu > Croatian <EURHRK= 7.3880 7.3882 +0.00% +0.57% kuna > Serbian <EURRSD= 118.2600 118.3200 +0.05% +0.20% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1031.94 1040.370 -0.81% -4.29% 0 Budapest 39722.76 39384.56 +0.86% +0.88% Warsaw 2253.83 2281.54 -1.21% -8.43% Bucharest 8632.25 8684.75 -0.60% +11.33% Ljubljana <.SBITOP 806.71 812.31 -0.69% +0.04% > Zagreb 1704.29 1714.89 -0.62% -7.52% Belgrade <.BELEX1 741.41 745.40 -0.54% -2.42% 5> Sofia 593.16 595.32 -0.36% -12.44% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6150 -0.0030 +218bps -4bps R> 5-year <CZ5YT=R 1.7710 0.0080 +202bps -4bps R> 10-year <CZ10YT= 2.0350 0.0070 +178bps +0bps RR> Poland 2-year <PL2YT=R 1.5590 0.0070 +213bps -3bps R> 5-year <PL5YT=R 2.4770 0.0400 +273bps -1bps R> 10-year <PL10YT= 3.0370 0.0320 +278bps +3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.18 2.30 2.37 2.01 <PRIBOR= > Hungary 0.29 0.50 0.79 0.13 Poland 1.74 1.76 1.78 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest; editing by Matthew Mpoke Bigg, Larry King)

CEE MARKETS-Rate hike bets buoy Czech crown despite inflation fall

Dec 10 2018

* Czech inflation drops to target as expected * CNB seen holding fire on Dec. 20, increasing rates next year * Crown sets a 5-week highs, Brexit fears keep investors cautious * Croatian central bank could continue to sell kuna-analysts By Sandor Peto and Igor Ilic BUDAPEST/ZAGREB, Dec 10 The crown set a 5-week high against the euro on Monday as expectations for further Czech central bank interest rate hikes prevailed despite a drop in annual inflation in November. Inflation dropped to 2 percent, the central bank's target level, from 2.2 percent in October. The crown reached its strongest levels since early November at 25.844 versus the euro before retreating to 25.855 by 1004 GMT, still firmer by 0.1 percent from Friday. Other Central European currencies were steady or a touch easier, while global fears of an economic slowdown pushed regional equities mostly lower, with Warsaw's bluechip index shedding 0.4 percent. Investors were cautious ahead of Tuesday's vote in which Britain's parliament could reject a deal on the terms of the exit from the European Union. "Brexit" without set terms would pose some risks to Central European economies and Poland in particular, in part due to their trade links with Britain. Trade was slow in the crown's market after the inflation figures, one dealer said. The inflation drop confirms that the CNB could take a pause at its Dec. 20 meeting after four straight rate hikes. But inflation pressure remains strong despite the fall driven by a decline in food and packaged holiday prices, and will require tighter monetary conditions, Erste analysts said in a note. "If koruna (the crown) starts appreciating again, we expect the CNB to deliver only one additional hike approx. in the middle of the next year," Erste said, adding that three hikes may come if the crown does not strengthen. Pressure on some of the region's central banks to increase interest rates has eased in the past two months as global crude prices sharply retreated. "The crude slump has rewritten expectations. People are waiting," one Budapest-based fixed income trader said, adding that Hungary's central bank could keep its rates on hold at its meeting on Dec. 18. The Croatian central bank, which manages the kuna in tight ranges, even had to sell the unit last week to stem its strengthening driven by European Union fund inflows, tourism revenues and increased lending in the local currency. Further interventions are likely, Erste said in a separate note. The kuna traded near 5-month highs, at 7.385 against the euro. Romania is also expected to report on Tuesday a fall in annual inflation, to 3.7 percent in November from 4.3 percent in October, which may provide support to Romanian government bonds, analysts said. "With liquidity conditions improving, today's October-2020 bond auction should see good demand," ING Bank said in a note. CEE SNAPSHOT AT MARKETS 1104 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8550 25.8780 +0.09% -1.21% crown > Hungary <EURHUF= 323.2400 323.1800 -0.02% -3.81% forint > Polish <EURPLN= 4.2912 4.2910 -0.00% -2.68% zloty > Romanian <EURRON= 4.6514 4.6464 -0.11% +0.61% leu > Croatian <EURHRK= 7.3850 7.3882 +0.04% +0.61% kuna > Serbian <EURRSD= 118.1400 118.3200 +0.15% +0.30% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1035.07 1040.370 -0.51% -4.00% 0 Budapest 39444.11 39384.56 +0.15% +0.17% Warsaw 2270.56 2281.54 -0.48% -7.75% Bucharest 8661.14 8684.75 -0.27% +11.70% Ljubljana <.SBITOP 806.52 812.31 -0.71% +0.02% > Zagreb 1702.83 1714.89 -0.70% -7.60% Belgrade <.BELEX1 741.22 745.40 -0.56% -2.45% 5> Sofia 593.81 595.32 -0.25% -12.35% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6150 -0.0030 +220bps -2bps R> 5-year <CZ5YT=R 1.8000 0.0370 +208bps +1bps R> 10-year <CZ10YT= 2.0340 0.0060 +179bps +1bps RR> Poland 2-year <PL2YT=R 1.5660 0.0140 +215bps +0bps R> 5-year <PL5YT=R 2.4700 0.0330 +275bps +1bps R> 10-year <PL10YT= 3.0420 0.0370 +280bps +4bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.14 2.24 2.30 2.01 <PRIBOR= > Hungary 0.31 0.54 0.84 0.13 Poland 1.75 1.76 1.79 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Radu Marinas in Bucharest Editing by Matthew Mpoke Bigg)

Czech crown seen gaining, sailing through troubled waters in 2019: Reuters poll

Dec 06 2018

The Czech central bank's anti-inflationary policy is likely to strengthen the crown next year, helping it outperform regional peers, a Reuters poll of 37 analysts showed on Thursday.

CEE MARKETS-Poland leads stocks, forex easing, Hungarian yields drop

Dec 05 2018

* Warsaw stocks, zloty ease on global growth fears * Polish central bank seen keeping rates on hold * Hungarian bond yields fall further ahead of buyback tender * Hungarian 10-year yield almost closes gap with Poland By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Dec 5 Warsaw led an easing of Central European currencies and stocks on Wednesday amid risk aversion in global markets ahead of a likely decision by the Polish central bank (NBP) to keep rates on hold. The zloty shed 0.2 percent to trade at 4.2855 against the euro at 0931 GMT, still near 2-month highs. Warsaw's blue chip equities index fell 1.2 percent, retreating from a 3-month high set in the previous session. The NBP is expected to keep its benchmark rate on hold at 1.5 percent, and repeat its projection at a news conference that rates could stay at record lows at least until the end of 2019. While global markets are gripped by fears of a global economic slowdown this year, third-quarter output data released in the past weeks in Central Europe continue to indicate robust growth, around 5 percent in annual terms in the case of Poland and Hungary. With crude prices retreating in the past two months, earlier worries over inflation dissipated in the region. As a result, government bond yields fell sharply, without hurting currencies. Poland's November data released last week showed a slump in annual headline inflation to 1.2 percent, below the NBP's target range between 1.5 and 3.5 percent. Inflation is expected to rise again next year, even though the region's economies are seen joining a trend of economic slowdown in their main export markets. "Supporters of loose monetary policy who would want the MPC (Monetary Policy Council) to stay idle at least until the end of 2019 outnumber these central bankers, who are frustrated with no response to uncomfortably high projected CPI path," Santander Bank analysts said in a note. Polish bond yields were mixed, with the 10-year yield ticking up 1 basis point to 3.05 percent. Hungary's corresponding yield, at 3.09 percent, almost closed a gap with the better-rated Polish paper, for the first time since June, as yields dropped ahead of a rare buyback auction by the Hungarian debt agency AKK. The breakdown of Hungary's third-quarter economic output growth continued to show a strong rise in household consumption, but some slowdown next year remains inevitable, analysts said. "With news that EU fund inflows have picked up, and after a Eurobond issue in September, AKK is in a very good position," one Budapest-based fixed income trader said. "It is cheap to finance forint positions... and sentiment remains positive despite the past decline in yields. We will have the year's last primary bond auction tomorrow, so there is support from the supply side as well," the trader added. CEE SNAPSHOT AT MARKETS 1031 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9100 25.9000 -0.04% -1.42% crown > Hungary <EURHUF= 323.8000 323.4400 -0.11% -3.98% forint > Polish <EURPLN= 4.2855 4.2776 -0.18% -2.55% zloty > Romanian <EURRON= 4.6535 4.6510 -0.05% +0.56% leu > Croatian <EURHRK= 7.4020 7.4025 +0.01% +0.38% kuna > Serbian <EURRSD= 118.0300 118.1300 +0.08% +0.40% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1056.02 1066.010 -0.94% -2.05% 0 Budapest 40844.74 40945.47 -0.25% +3.73% Warsaw 2315.81 2344.91 -1.24% -5.91% Bucharest 8702.55 8786.58 -0.96% +12.24% Ljubljana <.SBITOP 815.23 817.81 -0.32% +1.10% > Zagreb 1740.23 1736.83 +0.20% -5.57% Belgrade <.BELEX1 741.57 740.96 +0.08% -2.40% 5> Sofia 596.11 601.34 -0.87% -12.01% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.6420 0.0250 +227bps +4bps R> 5-year <CZ5YT=R 1.7850 0.0120 +208bps +3bps R> 10-year <CZ10YT= 2.0530 0.0090 +179bps +1bps RR> Poland 2-year <PL2YT=R 1.5580 0.0040 +219bps +2bps R> 5-year <PL5YT=R 2.5080 0.0240 +280bps +4bps R> 10-year <PL10YT= 3.0690 0.0250 +281bps +3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.18 2.30 2.37 2.01 <PRIBOR= > Hungary 0.30 0.52 0.80 0.13 Poland 1.75 1.78 1.82 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Andrew Cawthorne)

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