Stiri	Stiri afaceri	Stiri companii	Evenimente de afaceri

Erste CEE Macro Comments

HU Fiscal: Today 11am CET, the Hungarian Economy Minister Gyorgy Matolcsy will unveil details of the long awaited reform package which should secure sustainability of the deficit reduction beyond 2013 when many of the short-term measures will expire.

Local media reported some partial information about the package yesterday according to which the government plans to save about HUF 550-900bn annually in years 2012-2014 on the expenditure side. The Hungarian forint strengthened below 270 EURHUF on the news. We expect bonds to benefit from the announced measures and forecast 10Y yields to drop to 7% by year-end.

CZ Rates: CNB Governor Miroslav Singer said that Czech inflation pressures are currently weak but the low level of interest rates is  unsustainable in the long term. He also said that the current rate setting is working for now. We agree; in fact, demand inflation is in the deflation range (-0.9%). That the current rates are unsustainable in the long-term horizon is also rather trivial. Nobody can expect 0.75% rates forever. What is interesting is the timing of the tightening of monetary policy, which remains unclear. We expect the beginning of the tightening in 3Q, but early ECB rate hikes may accelerate such a step. Our forecast for 3m PRIBOR in June is 40 bps below current 3x6 mid FRA levels.

PL Debt: The Finance Ministry's Public Debt Department Director Piotr Marczak said that Poland financed around 30% of its 2011 borrowing needs at end-February and holds approximately PLN 26bn in zloty and foreign currency. The amount of foreign currency exceeds full-year debt servicing needs. He also said that the stock of securities held by non-residents increased by PLN 4.3 to PLN 132.5bn. This indicates lower issuance plans going forwards and is positive for bond yields but also underlines the vulnerability of the PLN bond market to a sell-off driven by foreign disinvestment. We forecast modestly lower yields at the long end of the PLN yield curve. Our strongest call is related to EURPLN where we see PLN strengthening to 3.74 by year-end as a direct consequence of rate hikes.

RO Money Market: On Monday, the NBR organized the first repo transaction since March 2010 and injected RON 2.2bn into the market at 6.25%. The maturity of the liquidity-providing operation is one week. This indicates that the NBR is uncomfortable with the recent increase of money market rates above the key rate. The governor recently said that the NBR is ready to provide liquidity to the market at any moment, but only short-term. We maintain our forecast for 5Y government yields at 6.6% in December, 70 bps lower than current levels.

Traders' comments:

SKK: A heavy issuance schedule in the Eurozone has been taken well at the outset of this week and sovereign spreads are generally better bid versus German benchmark bonds. Slovak bonds are holding steady with the recent flight to safety in Bunds opening up attractive spread levels.

HUF: HUF markets are rallying ahead of the fiscal announcement after some details were leaked ahead of schedule. The HUF popped 2 big figures vs the Euro yesterday and is once again testing the psychologically important level of 270. Bond yields fell an average of 20 bps across the curve on the back of the improvement in broad market sentiment with further potential if EURHUF breaks below 269.

PLN: The bond market had already anticipated lower issuance at the long end of the curve so the reaction to the MinFin comments was slightly positive but muted. All eyes are on the NBP rate decision scheduled for Thursday.

HRK: The market is steady as the 2011 Eurobond becomes due and a new USD Eurobond is widely anticipated.

CEE CDS & Credit: SovX CEE rallied again on the back of the extended rally in major equity indices as the US administration signaled its support for the immediate removal of Gadaffi. As is usual in times of increased volatility, the cash market is lagging the derivates market.

Sursa: http://www.erstegroup.com

Tags: market comments rates yields euro

Articole similare