Renewable Energy

CEE MARKETS-Assets little changed as investors eye Fed meeting

Credit: REUTERS/Peter Andrews

Emerging European assets were little changed ahead of a week holding few local developments, with local traders mostly eyeing a U.S. Federal Reserve meeting on Wednesday, which is expected to give indirect clues to local trading.

By Marton Dunai

BUDAPEST, June 17 (Reuters) - Emerging European assets were little changed ahead of a week holding few local developments, with local traders mostly eyeing a U.S. Federal Reserve meeting on Wednesday, which is expected to give indirect clues to local trading.

A strengthening dollar can cause assets in more peripheral markets to fall, and the Fed's reluctance to heed calls from investors and President Donald Trump to cut rates can keep the greenback on the strong side.

The Fed, amid demands by Trump to cut interest rates, is expected to leave borrowing costs unchanged but possibly lay the groundwork for a rate cut later this year as more policymakers could be open to cutting rates.

If Fed comments confirm to investors that they have been too optimistic about the timing of U.S. rate cuts, the dollar may strengthen and U.S. bond yields rebound, potentially causing a weakening of CEE currencies and bonds.

Expectations concerning those factors will set the tone for trade in the first days of next week.

"Right now there's not a peep," a dealer said in Budapest. "We'll keep our eyes peeled on the Fed and later this month on local rate comments from the central bank."

The Czech crown hung around a 9-month high, boosted by comments from central bank board member Vojtech Benda, who told Bloomberg last week that he would consider a June hike although the bank itself has signalled rate stability ahead.

"Positive expectations before the Fed has boosted the crown to a certain degree. Hawkish comments from Benda could have also played a certain role. However, if no one from the Governor's inner circle joins him, it won't carry much weight for the June meeting," CSOB said in a client note.

Markets still price in a cut in the next year as the next rate move.

Stock markets were mixed, with the Budapest stock exchange introducing a new bank stock for MKB MKBB.BU, a bank formerly in German hands that was nationalised and reorganised after the crisis and expects to emerge from regulatory restrictions and embark on a growth path.

The bank has an initial market capitalisation of more than 197 billion forints ($685.24 million), making it the sixth-largest stock on the exchange according to a statement. L8N23O1B9

Romanian markets were closed for a holiday.

CEE MARKETS

SNAPSHOT

AT 1013 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

Czech crown

EURCZK=

25.5410

25.5250

-0.06%

+0.65%

Hungary forint

EURHUF=

322.3000

322.0800

-0.07%

-0.38%

Polish zloty

EURPLN=

4.2594

4.2566

-0.07%

+0.71%

Romanian leu

EURRON=

0.0000

4.7230

n/a

-1.45%

Croatian kuna

EURHRK=

7.4040

7.4075

+0.05%

+0.08%

Serbian dinar

EURRSD=

117.8000

117.9000

+0.08%

+0.42%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

Prague

.PX

1053.96

1051.4600

+0.24%

+6.83%

Budapest

.BUX

40827.26

40588.18

+0.59%

+4.31%

Warsaw

.WIG20

2279.07

2286.46

-0.32%

+0.11%

Bucharest

.BETI

8504.24

8504.24

+0.00%

+15.18%

Ljubljana

.SBITOP

872.41

871.72

+0.08%

+8.47%

Zagreb

.CRBEX

1899.16

1899.83

-0.04%

+8.60%

Belgrade

.BELEX15

721.77

724.20

-0.34%

-5.24%

Sofia

.SOFIX

580.93

578.00

+0.51%

-2.28%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

1.6120

0.0280

+230bps

+2bps

5-year

CZ5YT=RR

1.5070

0.0070

+211bps

+1bps

10-year

CZ10YT=RR

1.6020

0.0140

+185bps

+1bps

Poland

2-year

PL2YT=RR

1.6080

0.0320

+229bps

+3bps

5-year

PL5YT=RR

1.9710

0.0070

+257bps

+1bps

10-year

PL10YT=RR

2.4100

0.0100

+266bps

+1bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

2.16

2.06

1.97

2.17

Hungary

HUFFRABUBOR=

0.29

0.44

0.57

0.18

Poland

PLNFRAWIBOR=

1.73

1.73

1.70

1.72

Note: FRA quotes

are for ask prices

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

(Additional reporting by Jason Hovet in PRAGUE; Editing by Alison Williams)

((marton.dunai@tr.com; +36-30-952-7878 (Cell/Signal); https://reut.rs/2OXGXbW ;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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