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Polish bond yield sets 4-year low, currencies rise despite firm dollar


Reuters


By Sandor Peto and Alicja Ptak

BUDAPEST/WARSAW, June 14 (Reuters) - Poland's 10-year government bond yield sank to its lowest level in more than four years on Friday after an attack on two oil tankers in the Gulf, which the United States blamed on Iran, led to global buying of less risky assets.

Tehran denied the allegation following the attacks on Thursday, but concerns grew about a new U.S.-Iranian confrontation.

"(There is a) big drop in yields worldwide, (and) the rising presence of foreign investors dragged (Polish) yields down," said Michal Zak, dealer at mBank.

"Yesterday's (Polish government bond) auction apparently has not covered all positions, if only a day after we see a 10 basis point drop," he added, referring to the fall in yield from Thursday's peak.

Other Central European bond yields also dropped, and currencies mainly firmed slightly, despite a rebound in U.S. yields and the dollar against major currencies, partly after better-then-expected U.S. retail sales data.

In recent weeks, dollar sales have helped the region's main currencies to firm, and on Friday the zloty touched a 10-month high against the euro at 4.2525, and the Czech crown a 9-month high at 25.523.

"The reverse correlation with the dollar does not work 100 percent. There is hardly any trade in local markets right now, this is a sleepy Friday," one Budapest-based dealer said.

"After the retail figures... the first U.S. rate cut may come later, but the expectation is still for cuts."

Despite a rise in U.S. Treasury bond yields, German yields remained lower, though the 10-year yield was off record lows touched earlier in the session.

Although a surge in wages in the region is pushing consumer prices higher, Poland has the lowest annual inflation among Central Europe's main economies - revised up to 2.4 percent for May on Friday.

Polish rate setter Jerzy Osiatynski said the central bank may need to start to increase its record low interest rates next year, but that in 2019 borrowing costs would not change.

Hungary's 10-year yield was fixed lower by 5 basis points from Thursday's fixing at 2.74%.

The forint firmed 0.1 percentto 321.8 versus the euro.

CEE MARKETS

SNAPSHOT

AT 1517 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

Czech crown

25.5250

25.5600

+0.14%

+0.71%

Hungary forint

321.8000

322.1400

+0.11%

-0.22%

Polish zloty

4.2559

4.2564

+0.01%

+0.79%

Romanian leu

4.7225

4.7215

-0.02%

-1.45%

Croatian kuna

7.4120

7.4130

+0.01%

-0.03%

Serbian dinar

117.9200

118.0000

+0.07%

+0.32%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

Prague

1049.66

1050.8800

-0.12%

+6.40%

Budapest

40636.65

40469.80

+0.41%

+3.83%

Warsaw

2289.25

2300.20

-0.48%

+0.55%

Bucharest

8516.02

8477.19

+0.46%

+15.34%

Ljubljana

871.72

870.12

+0.18%

+8.39%

Zagreb

1897.72

1901.30

-0.19%

+8.51%

Belgrade

724.20

729.35

-0.71%

-4.92%

Sofia

579.80

578.71

+0.19%

-2.47%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

1.6150

0.0280

+230bps

+5bps

5-year

1.5410

0.0390

+214bps

+4bps

10-year

1.5840

-0.0140

+183bps

-1bps

Poland

2-year

1.5760

-0.0200

+226bps

+1bps

5-year

1.9660

-0.0200

+257bps

-2bps

10-year

2.4070

-0.0450

+265bps

-4bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

2.17

2.06

1.95

2.17

Hungary

0.29

0.41

0.51

0.18

Poland

1.74

1.73

1.71

1.72

Note: FRA quotes

are for ask prices

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






This article appears in: Politics , Stocks , World Markets , Economy



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