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2019/09/16 / Erste Group Research

Poland | Weekly Focus

Macro releases for August to be in focus this week. Industrial production most likely to suffer from lower number of working days and we see it at meager 1.8% y/y. If such low industrial activity persisted, we could see GDP below 4% in 3Q19. Retail sales should benefit from favorable situation on labor market and increased social transfers. FOMC rate decision to be decisive factor for EURUSD development and reaction from zloty cannot be ruled out.

Last week, the ECB meeting triggered a lot of volatility on the core and local bond market. The 10Y yield continued to go up at the beginning of the week, only to reverse on Wednesday and bottom out below 2% shortly after Thursday’s announcement of ECB monetary easing. Once the market had digested the ECB decision, the rally on German Bunds began and the Polish 10Y yield also went up, closing the week above 2.1%. The spread over the 10Y German Bund was swinging in a narrow range between 255bp and 260bp. This week, the FOMC meeting and important local macro releases for August will shape yield development in Poland. The publication of industrial production data could have negative impact on the long end, if we see a negative surprise.

The ECB decision did not bring much that was new to EURPLN development and the zloty was mostly stable throughout the week, fluctuating between 4.33 and 4.34 vs. the EUR. The EURPLN strengthened slightly at the end of the week and moved towards 4.32. This week, the FOMC meeting will be the most important event for the EURUSD. A rate cut is fully priced in by markets. Moreover, any news on Brexit could also give the market direction, but this is unpredictable. Local releases should remain neutral for the zloty.

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General information

AuthorErste Group Research
Product nameCEE Country Update
Topic in focusMacro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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