Look for:

Research Detail

2019/07/15 / Erste Group Research

CEE Market Insights


Dovish Fed minutes did not support the CEE FX market, as most of the currencies weakened last week. The strongest decline was observed in the Hungarian forint, which depreciated by 0.6% last week. Apart from global factors that affected HUF, lower than expected inflation for June, posed additional pressure on the currency. Due to easing price pressure, we do not expect any tightening step to be announced by the central bank this year. The PLN and CZK followed the HUF and also depreciated, although to a lesser extent.

L ast week’s behavior of the global and local FI market is somewhat surprising to us. Over the course of the week, 10Y German Bunds went up by more than 15bp and closed the week at around -0.2%. Such development is contradictory to the dovish testimony of Fed Chairman Powell and market certainty about a rate cut in the US at the July rate-setting meeting. The CEE bond market followed core developments and the long end of the curve mostly shifted upwards. The most visible move north was observed in Hungary, Poland and Slovakia. As an aftermath to the decision on a rate cut in Serbia, the short end of the local curve plummeted by roughly 20bp.

Week Ahead: Summer will be hot in Romania, as it seems that officials have realized that fiscal expansion has reached its limits and they need to act in order to keep the deficit below 3% of GDP. The Romanian Ministry of Finance is preparing a package of fiscal measures worth 0.4% of GDP that should be officially presented by the end of this month. So far, cuts in special pensions and some social spending have been discussed in the media. In the Czech Republic, Social Democrats are getting closer to quitting the government of PM Babis, who will need to seek support for his minority government (and new ministers) in the parliament. This week, Poland will be the first country in CEE to publish industrial output and retail sales data for June. That means we will have a complete set of indicators for the final run of our GDP now-cast model for 2Q. At the moment, our now-cast indicates above 5% GDP growth of the Polish economy in 2Q19. On Friday, Fitch Ratings may upgrade Slovenia’s sovereign rating by one notch, or at least change the outlook to positive.


PDF Download Download PDF (586kB)

General information

AuthorErste Group Research
Date2019/07/15
Languageen
Product nameCEE Insights
Topic in focusFX, Macro/ Fixed income
Economy in focusCroatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-
DownloadPDF (586kB) PDF Download



Accept

We use cookies and web analysis software to give you the best possible experience on our website. By continuing to browse this website, you consent for these tools to be used. For more details and how to opt out of these, please read our Data protection policy.

INFORMATION FOR CORPORATE AND INSTITUTIONAL CLIENTS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended), citizen/resident of Australia, Canada, Great Britain and Japan. For this reason, the distribution or redistribution of the information, materials and products into United States, Australia, Canada, Great Britain and Japan or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited.

The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.
(iV) It is no consumer.