CEE Weekly - Bond Markets Outlook

7 August 2009

RAIFFEISEN BANK S.A.

 

Highlights

• Poland – Risk sentiment remained positive and pulled Polish  yields down further this week. Support came from S&P’s affirmation of the short- and long-term rating of Polish debt. Although 2y yields continued to head south, we think that the probability of a setback is more and more increasing.

• Hungary – As long as positive sentiment towards emerging markets prevails, the recent correction is not likely to last long, and in the short run we expect the HUF to strengthen again (EUR/HUF below 265) and yields on Hungarian government bonds to creep to the south. This would provide stimulus for another rate cut as early as August (50bp).

• Czech Republic – The Czech National Bank cut its key 2-week repo rate by 25bp to 1.25% on its monetary policy board meeting on Thursday. The market was split on the rate decision with us leaning towards no change.

 

Weekly outlook

Local currency bonds. Market overview

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