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Hungarian bond yields retreat on ECB growth worries


Reuters


By Sandor Peto

BUDAPEST, April 16 (Reuters) - Hungarian government bond yields retreated from multi-week highs on Tuesday as worries over economic slowdown in the European Union's main economies nudged Central European yields lower.

The region's yields typically rose in the past few days, tracking Bunds.

Bund yields fell on Tuesday due to reports that several European Central Bank policymakers regarded the bank's economic projections as too optimistic.

The comments, which suggested that monetary policy in the euro zone could remain loose longer, triggered a downwards correction in Hungarian yields.

They did not fully track a later rebound in Bund yields.

"Understanding the meaning of the ECB story was a far cry and Bund yields rebounded. But Hungarian yields remained lower (than yesterday)," one Budapest-based trader said.

Hungary's 10-year yield remained below 4-month highs set on Monday, trading at 3.23 percent, while 5- and 3-month yields were off multi-week highs.

TAKEN STRENGTH

The forint , which had taken strength from the previous surge in yields, also retreated.

It joined a moderate easing of other Central European currencies, returning behind the 320 psychological line against the euro, off a 3-week high set in early trade beyond its 100-day moving average of 319.5.

Dealers said technical factors kept the currency near 320.

The Hungarian 10-year yield's spread over the corresponding Polish bond was still the highest in more than a month.

The Polish yield continued to decline, trading at 2.85 percent, down 2 basis points from Monday and 5 basis points from Friday.

Polish bond yields declined on Monday after the government, gearing up for elections late this year, announced new measures to stimulate the economy and generate revenues.

The measures include transferring all state-guaranteed private pension funds to individual retirement accounts.

"The prospect of GDP growth close to 4 percent and budget deficit seemingly under control could well prove sufficiently attractive for foreign investors to look beyond domestic political ploys and directly at high yielding opportunities in Poland," Rabobank analyst Piotr Matys said in a note.

CEE MARKETS

SNAPSHOT

AT 1611 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

Czech crown

25.6750

25.6360

-0.15%

+0.12%

Hungary forint

320.2500

320.1500

-0.03%

+0.26%

Polish zloty

4.2733

4.2718

-0.04%

+0.38%

Romanian leu

4.7610

4.7586

-0.05%

-2.25%

Croatian kuna

7.4385

7.4360

-0.03%

-0.38%

Serbian dinar

118.0000

117.9300

-0.06%

+0.25%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

Prague

1094.24

1103.0200

-0.80%

+10.91%

Budapest

42765.09

42815.92

-0.12%

+9.26%

Warsaw

2367.42

2358.19

+0.39%

+3.99%

Bucharest

8242.52

8271.75

-0.35%

+11.63%

Ljubljana

879.45

882.58

-0.35%

+9.35%

Zagreb

1806.24

1817.12

-0.60%

+3.28%

Belgrade

739.31

740.59

-0.17%

-2.94%

Sofia

575.36

575.43

-0.01%

-3.21%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

1.8350

0.0070

+242bps

+1bps

5-year

1.6910

0.0100

+207bps

+1bps

10-year

1.8490

0.0010

+179bps

-1bps

Poland

2-year

1.6060

-0.0210

+219bps

-2bps

5-year

2.2100

-0.0070

+259bps

-1bps

10-year

2.8730

-0.0200

+281bps

-3bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

2.16

2.20

2.20

2.02

Hungary

0.36

0.51

0.71

0.16

Poland

1.74

1.75

1.75

1.72

Note: FRA quotes

are for ask prices

**************************************************************






This article appears in: Fundamental Analysis , Stocks , World Markets , Bonds




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