CEE MARKETS 2-Polish bonds retreat; attention shifts to output data

Telekom Slovenije, D.d

16/09/2014 16:11

* Polish data leave rate cut outlook unchanged 
    * CEE currencies, equities rebound, Fed still eyed 
    * Serbian central bank intervenes to defend dinar 
    * Floods hit Serbia, Croatia again 
 
    By Sandor Peto 
    BUDAPEST, Sept 16 (Reuters) - Polish government bonds 
retreated on Tuesday after employment and corporate wage figures 
for August suggested the country's central bank would not cut 
rates any more than expected. 
    The move also reflected a small rise in the yields of 
long-dated euro zone government debt. 
    Poland's 10-year benchmark yield  PL10YT=RR  rose to 3.07 
percent from a morning low at 3.03 percent. Earlier, Poland 
reported that wages rose 3.5 percent in August on an annual 
basis and employment continued to grow, albeit at a slightly 
slower pace of 0.7 percent. 
    Analysts said industrial output figures due on Wednesday may 
provide more clues about when the Polish central bank will cut 
its main interest rate, now 2.5 percent, and by how much. The 
consensus forecast is for 0.7 percent growth in output. 
    If the output figure disappoints, "it may fuel expectations 
that the overall (rate) cut will be bigger than we currently 
expect (i.e. 25 basis pints in October and another 25 basis 
points in November)," Erste said in a note. 
    Economic slowdown, partly due to the effects of conflict in 
Ukraine, have made the region's central banks, especially 
Poland's, increasingly dovish in the past months. 
    Concern that the Federal Reserve may signal at its meeting 
on Wednesday that it will soon raise rates has weighed on 
long-dated bonds in recent weeks. But expectations the European 
Central Bank will begin a programme of asset purchases have 
started to prop up bond prices, and yields are lower than they 
were six weeks ago.    
    The average yield on the 3-month Treasury bills Hungary sold 
at an auction stayed at record lows at 1.38 percent. Longer debt 
yields even dropped by a few basis points in the secondary 
market in low turnover. 
     
    CONCERNS EASE 
    Concern over Wednesday's Fed meeting and turmoil in Ukraine 
had eased by afternoon trade, and the region's equities and 
currencies mostly recovered from early declines. 
    The loss of the stocks of Hungarian pharmaceuticals Richter 
 GDRB.BU , which exports to Russia and Ukraine, narrowed to 0.36 
percent from more than 1 percent. Budapest's main stock index 
 .BUX  gained 0.25 percent, although turnover remained low. 
    Prague's main stock index  .PX  was still down by 1.1 
percent, dragged lower mainly by a 2 percent decline of 
electricity producer CEZ  CEZP PR>. CEZ fell on profit-taking; 
its shares had risen more than 10 percent since early August. 
    The shares of Slovenia's telecom operator, Telekom 
 TLSG.LJ , jumped by more than 6 percent to 137.5 euros after 
incoming finance minister Dusan Mramor said late on Monday the 
privatisation of Telekom will continue. Ljubljana's blue-chip 
SBI index  .SBITOP  gained 1.9 pct.  ID:nL6N0RG3KV  
    The privatisation was put on hold earlier in September,  
awaiting approval of the sale by the new centre-left government 
that is expected to be sworn in on Thursday.  
    The dinar  EURRSD=  rose a third of a percent against the 
euro to 118.72, strongly outperforming regional peers, after 
hitting two-year lows a week ago because of concern over a delay 
in much-needed fiscal reforms in Serbia. 
    Dealers said the Serbian central bank, which repeatedly 
intervened this year to protect the currency, bought the dinar 
in the market again in early trade.  ID:nL6N0RH1ZY  
    Croatia's kuna  EURRSK=  eased 0.1 percent. 
    One person died in Serbia and hundreds were evacuated due to 
new floods in the Balkans. Severe floods in May killed dozens 
and worsened Croatia's and Serbia's recession and fiscal 
problems.  ID:nL6N0RH24B     
 *                                                            * 
 **************** CEE MARKETS SNAPSHOT AT 1556 CET ************  
 ************************* CURRENCIES ************************* 
                            Latest  Previous   Daily   Change   
                            bid     close      change  in 2014  
 Czech crown      EURCZK=    27.547    27.558   +0.04%  -0.78%  
 Hungary forint   EURHUF=   314.250   314.120   -0.04%  -5.50%  
 Polish zloty     EURPLN=     4.197     4.198   +0.04%  -1.12%  
 Romanian leu     EURRON=     4.415     4.410   -0.11%  +1.02%  
 Croatian kuna    EURHRK=     7.625     7.620   -0.07%  -0.09%  
 Serbian dinar    EURRSD=   118.720   119.120   +0.34%  -3.55%  
 Note: daily change calculated from previous close at 1800 CET  
 **************************** STOCKS ************************** 
                            Latest   Previous  Daily   Change   
                                     close     change  in 2014  
 Prague           .PX         979.65   990.80   -1.13%  -0.74%  
 Budapest         .BUX      18723.13 18675.80   +0.25%  +2.12%  
 Warsaw           .WIG20     2490.02  2489.77   +0.01%  +3.56%  
 Bucharest        .BETI      7108.83  7124.08   -0.21% +09.74%  
 Ljubljana        .SBITOP     830.68   815.35   +1.88% +29.59%  
 Zagreb           .CRBEX     1866.57  1861.02   +0.30%  +4.84%  
 Belgrade         .BELEX15    630.60   632.92   -0.37% +14.32%  
 Sofia            .SOFIX      552.41   555.45   -0.55% +12.42%  
 ***************************** BONDS ************************** 
                        Yield    Yield    Spread     Daily      
                        (bid)    change   vs Bund    change in  
 Czech Republic                                      spread     
   2-year    CZ2YT=RR    0.176    -0.022   +024bps    -3bps     
   5-year    CZ5YT=RR    0.439    -0.018   +022bps    -2bps     
  10-year    CZ10YT=RR   1.200    -0.037   +014bps    -3bps     
 Hungary                                                        
   3-year    HU3YT=RR    3.320    -0.060   +334bps    -7bps     
   5-year    HU5YT=RR    3.820    -0.070   +360bps    -7bps     
  10-year    HU10YT=RR   4.830    -0.070   +377bps    -6bps     
 Poland  
   2-year    PL2YT=RR    2.056    -0.010   +212bps    -2bps   
   5-year    PL5YT=RR    2.493    +0.020   +227bps    +2bps   
  10-year    PL10YT=RR   3.187    +0.005   +213bps    +2bps   
 ******************* FORWARD RATE AGREEMENTS ****************** 
                            3x6     6x9    9x12 3M interbank 
 Czech Rep  CZKFRA  PRIBOR=   0.335   0.350  0.345   0.35  
 Hungary    HUFFRA  BUBOR=    2.210   2.280  2.360   2.11  
 Poland     PLNFRA  WIBOR=    1.960   1.870  1.880   2.46  
 Note: FRA quotes are for ask prices  
 ************************************************************** 
  
 (Additional reporting by Marja Novak in Ljubljana/Michal Janusz 
in Warsaw/Ivana Sekularac and Aleksandar Vasovic in Belgrade; 
Editing by Larry King) 
 ((sandor.peto@thomsonreuters.com)(+36 1 327 4744)(Reuters 
Messaging: sandor.peto.thomsonreuters.com@reuters.net)) 
  
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