CEE MARKETS-FX drifts before U.S. inflation data, bond sales on deck

4ig.

12/01/2023 10:30

BUCHAREST, Jan 12 (Reuters) - Central European shares
mostly strengthened on Thursday while currencies were on softer
ground, with markets awaiting U.S. inflation data later in the
day for clues on how much higher the Federal Reserve will take
interest rates.
    In debt markets, Hungary was the latest to begin domestic
bond auctions in the region, offering a trio of paper. On
Wednesday, the first Czech bond auctions of 2023 drew solid
demand ahead of another high-borrowing year.
    With markets largely following global moods, by 0930 GMT
Warsaw's blue chip index  .WIG20  led gains in central Europe
with a 1.1% rise, followed by Prague’s  .PX  0.7% gain. 
    The Hungarian forint  EURHUF=  was the main currency mover,
down 0.3% against the euro on the day at 399.3000, and the
Polish zloty  EURPLN=  edged 0.1% lower. The Czech crown
 EURCZK=  and the Romanian leu  EURRON=  were flat at 0950 GMT.
    Central European rate setters have largely shifted to stable
interest rates after sharp hikes since 2021, coming as global
banks like the U.S. Fed raise rates. That is adding pressure on
central Europe's currencies.
    Elsewhere, bond yields were mixed in the region after
generally dropping so far this year.
    "A year of high volatility is certainly ahead of us, but we
assume that, following changes in domestic and global monetary
policy, yields will go down, counterbalanced by some fiscal
fears expressed through asset swaps," said Mateusz Sutowicz,
financial markets analyst at Bank Millennium in Warsaw.
    "Q1 is also a period of historically high supply of bonds,
so theoretically Q1 may keep yields at relatively high levels."
    Besides Hungary, Romania also plans to issue 1 billion lei
worth of April 2030 and October 2034 bonds on Thursday. 
    Tenders so far this year have been heavily oversubscribed.
The finance ministry has raised its gross funding needs for this
year to roughly 160 billion lei from 142.6 billion. 
    The Czechs held their first bond auction of 2023 on
Wednesday, met with strong demand.  CNB08  
    The yield on 10-year paper  CZ10YT=RR  was largely steady on
Thursday, bid at 4.446%, already down 67 basis points so far in
2023.
    "The auction was relatively strong: we would describe it as
rather bullish as the demand was substantial, but the increased
issuance volumes are bearish per se and also suggest higher
supply in the near future," Komercni Banka trader Marek Lesko
said.
     "Abroad, all eyes (today) will be on U.S. inflation to see
if the disinflationary trend we’ve observed in the core markets
continues." 
           CEE       SNAPSHO   AT                      
           MARKETS   T        1050              
                              CET               
                     CURRENC                           
                     IES                        
                     Latest   Previou  Daily    Change
                              s                 
                     bid      close    change   in 2023
 Czech                                         
 Hungary                  0        0           
 Polish                                        
 Romanian                                      
 Croatian                                      
 Serbian                  0        0           
 Note:     calculated from             1800            
 daily                                 CET      
 change                                         
                                                       
                     Latest   Previou  Daily    Change
                              s                 
                              close    change   in 2023
 Prague     .PX      1282.54  1271.30   +0.88%   +6.72%
                                   00           
 Budapest   .BUX     46211.3  46277.2   -0.14%   +5.52%
                           6        7           
 Warsaw     .WIG20   1945.61  1914.74   +1.61%   +8.57%
 Buchares   .BETI    12413.4  12331.8   +0.66%   +6.43%
 t                         9        6           
 Ljubljan  <.SBITOP  1094.80  1093.39   +0.13%   +4.39%
 a         >                                    
 Zagreb     .CRBEX   2079.50  2068.35   +0.54%   +691.3
                                                     8%
 Belgrade  <.BELEX1   838.66   839.09   -0.05%   +1.70%
           5>                                   
 Sofia      .SOFIX    616.37   620.09   -0.60%   +2.47%
                                                       
                     Yield    Yield    Spread   Daily
                     (bid)    change   vs Bund  change
                                                in
 Czech                                          spread
 Republic                                       
   2-year                                  s  
   5-year                                  s  
                                          s  
 Poland                                                
   2-year                                  s  
   5-year                                  s  
                                          s  
           FORWARD                                     
                     3x6      6x9      9x12     3M
                                                interba
                                                nk
 Czech      CZKFRA      7.11     6.83     6.32     7.22
 Rep                                           
 Hungary    HUFFRA     14.40    12.82    11.47    16.09
            BUBOR=                              
 Poland     PLNFRA      6.95     6.77     6.29     6.95
            WIBOR=                              
 Note:     are for ask                                 
 FRA       prices                               
 quotes                                         
 *********************************************         
 *****************                              
 ($1 = 370.6700 forints)
($1 = 4.5808 lei)
($1 = 4.3560 zlotys)
 (Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,
Anna Wlodarczak-Semczuk in Warsaw and Gergely Szakacs in
Budapest; Editing by Kim Coghill)
 ((luiza.ilie@thomsonreuters.com; +4021 527 0312; https://www.reuters.com/journalists/luiza-ilie))
 
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