CEE Bond Markets Outlook
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8 Martie 2011 |
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RAIFFEISEN BANK S.A. |
Adresa
Piaţa Charles de Gaulle, Nr. 15
011857 Bucureşti, Sector 1
Telefon
+40-21-306.10.00
+40-21-306.15.54
Fax
+40-21-230.07.00
Website
www.raiffeisen.ro
Highlights
Poland – The press release following the MPC meeting (no change) did not contain any surprises. However, the outlook that rate hikes may follow later in 2011 remains on the table. Thus, the carry in PLN will remain attractive, while the currency looks cheap following the recent sell-off. We would seize current EUR/PLN levels and short positioning on the markets to open a long EUR/PLN position. As there has been practically no movement on the long end of the LCY bond market despite the recent PLN weakening, we are still fine with our "Buy" recommendation for longer tenors.
Hungary – While in our view the reform package is a fairly comprehensive one with a decent structure (in terms of expenditure cut vs. revenue items), the communication has been relatively poor. The lack of details on the concrete decisions, on the timetable for decision-making, and on the time-table for implementation are aspect that we identify as the biggest problems with the package – these undermine its credibility and certainly raise the implementation risk.
Czech Republic – The Czech Ministry of Finance announced that it will sell CZK 50 bn of government bonds in Q2. That is 10 bn higher than the amount issued in Q1, but slightly less than the government will redeem in Q2. Thus, the supply will probably be easily absorbed. The governor of the Czech central bank, M. Singer, said that inflationary pressures are weak. On the other hand, he noted that the current interest rate policy is working for now, but the low level is unsustainable over the long run.
Romania – Real GDP advanced marginally in Q4 (+0.1% qoq), after falling in Q3 (-0.7% qoq). This modest gain was supported by increases in exports (+5.8% qoq) and gross fixed capital formation. Gross fixed capital formation advanced by 0.5% qoq, possibly due to more public capital spending. On the other hand, both household consumption and public consumption fell in Q4 (-1.2% qoq, and -5.7% qoq, respectively).
Croatia – Government short-term debt rose by an additional HRK 850 mn, as investor interest far exceeded the planned issuance of HRK 440 mn HRK-linked and EUR 31 mn of EUR-linked bills. The overwhelming demand for treasury bills reflects the lack of other attractive investments and the high liquidity in the system. Consequently, yields on all maturities continued to fall.
Russia – Excess domestic consumption in Russia is fuelling demand inflation which will maintain upward pressure on consumer and producer prices. Unsurprisingly, the central bank of Russia already started tightening its monetary policy by increasing key interest rates and stepping up mandatory reserve requirements for commercial banks. The bank also softened rouble policy to allow more rouble appreciation to curb import price growth. We expect the rouble strengthening to become more pronounced during Q1 and Q2 as market players adapt to the central bank’s policies.
Turkey – Next week’s most important data release is the industrial production figure for January. Output may decrease in seasonally adjusted monthly terms, as the December growth of 5.7% was very strong. Developments in oil prices and the crisis in Libya will, however, be of more relevance in the coming weeks. Thus, we are cautious in the short term, but do not rule out shortterm “technical” rebounds such as the one seen on Thursday.
