CEE - Bond Markets Outlook

24 Octombrie 2011

RAIFFEISEN BANK S.A.

 

Highlights

• Poland – Due to another rise in risk aversion on the financial markets Polish yields moved higher along the whole curve during the last days with 5Y yields rising to 5.15%. Another negative factor was the information about possible change of Poland's rating outlook by Moody's. The ratings agency warned that in case of doubts about fiscal tightening in Poland it may change the outlook to negative. Along with the developments in the Eurozone, Poland's fiscal situation will gain attention after last week parliamentary elections.

• Hungary – Next week, the central bank will get down to setting rates again. According to the latest Minutes, the MPC seems to have shifted towards a more hawkish monetary policy stance (they already considered a rate hike at the last meeting). Since then, HUF has depreciated modestly, and risk measures are still elevated. However, we do not project any interest rate hike just yet, as conditions have not worsened enough.

• Czech Republic – Two weeks ahead of the next monetary policy meeting, the governor of the Czech National Bank M. Singer repeated that the next move in the Czech interest rate could be in either direction. He added that “nothing has changed” since the last news conference in September. Of course, with respect to the economic growth outlook, the CNB forecast will be lowered at the next meeting. With our still rather pessimistic GDP forecast for the coming quarters we cannot rule out the possibility of an interest rate cut in the future.

• Romania – There was nothing new in the local bond market last week. In the secondary market, yields were roughly unchanged both for short and long maturities. Surprisingly, the Finance Ministry succeeded in meeting its debt target at a 2-year T-bond auction on Monday when it raised RON 800 mn at an average yield of 7.4%. The Finance Ministry failed to meet debt targets or even decided to reject investors' bids at the previous auctions this month.

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