CEE Bond Markets Outlook
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26 Septembrie 2011 |
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RAIFFEISEN BANK S.A. |
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Highlights
POLAND
The scope for a Zloty rebound and drop in Polish bond yields seems limited as concerns about the sovereign debt crisis in Europe are not likely to fade away soon. Among local events, the key factor the next week will be PMI manufacturing, which will be an important indication how fast and with what strength the global economic slowdown filters through to the Polish economy. However, given the importance of current developments abroad the key driver for the Polish market will remain external ones.
HUNGARY
The monetary council left its key policy rate unchanged, but the meeting had surprisingly hawkish undertones, as Governor Simor also hinted at discussing an interest rate hike. The MPC also changed its communication about further developments, which may indicate that the members find it possible to raise rates for financial stability reasons. Nevertheless, EUR/HUF shot to a new 2-year high due to the skyrocketing risk aversion.
CZECH REPUBLIC
With the further increase in risk aversion, the Czech currency depreciated 2%, moving close to EUR/CZK 25.0. As was widely expected, the Czech National Bank left its key interest rate unchanged at 0.75% in a unanimous decision. This that means two out of seven CNB board members changed their opinions and did not vote for a rate hike as they had for the last couple of quarters.
ROMANIA
On 29 September, the board of the National Bank of Romania (NBR) will meet to discuss monetary policy issues. We expect the NBR to maintain the monetary policy rate unchanged at 6.25% for the time being. We also believe that the central bank will keep the ratios for minimum reserve requirements unchanged. In the statement following the last monetary policy meeting (at the beginning of August), the NBR still had major concerns regarding inflation.
CROATIA
CBS confirmed real GDP growth of 0.8% yoy in Q2 and the assumptions that household and government consumption as well as net exports contributed to the increase. Although Q3 may actually show an acceleration in the growth rate boosted by a good tourism season, more sobering results are to be expected in Q4.
RUSSIA
The rouble market will remain under pressure from the global market sell-off and potentially lower oil prices. The parallel shift of the rouble OFZ curve by 50bp does not reflect the ongoing increase in the liquidity premia. Consequently, the premia for holding longer duration OFZ has to go up by about 1%, which will generate a bearish steepening of the OFZ curve from the long end. If the crisis situation escalates, the central bank will have to consider relaxing liquidity conditions by bringing down the cost of REPO operations and lowering reserve requirements for banks in a move similar to 2008.
TURKEY
The Turkish central bank left its policy rate unchanged, while our expectation of another cut in 2011 remains intact. Meanwhile S&P upgraded Turkey’s long term local currency rating by one notch to BBB- with a positive outlook – or into the investment grade category – while the key FX rating was confirmed at two notches below investment grade. The FED’s pessimistic assessment of the global economy overshadowed the rating event and hit Turkish assets severely, in line with its peers. Next week’s data calendar is rather unspectacular with the exception of the capacity utilization rate, whereas mainly core market news will dominate again FI and FX movements in the week to come.
Local currency bonds - Market overview
