Reuters
By Sandor Peto
BUDAPEST, Jan 3 () - Hungarian government bonds extended their price gains, with yields dropping to new multi-month lows amid optimism that demand will be robust at the year's first auction on Thursday.
The country's 10-year papers traded at yields around 2.815 percent ahead of the auctions, their lowest level since May 2018.
Yields dropped even though the 70 billion forint ($246.77 million) offer at the primary sale was 15 billion higher than at the last auction held four weeks ago.
The business news site portfolio.hu reported late on Wednesday that the government had received a huge amount of European Union fund inflows in December. The Finance Ministry did not immediately comment on the report.
"I expect a strong auction," one Budapest-based fixed income trader said.
"The fall in yield follows a plunge in interest rate swaps (IRSs) after the central bank's latest swap tender (in December), the trader added.
"There is a very wide spread between IRSs and bond yields, which will inevitably narrow, but until then it may trigger package sales by some big accounts."
Poland's 10-year bond yield fell similar to its Hungarian peer, by around 10 basis points already on Wednesday, helped by disappointing PMI manufacturing index figures from Poland and the Czech Republic and a decline in Bund yields.
Poland's 10-year yield moved a tad lower again on Thursday to 2.746 percent on Thursday, while Bund yields changed little, and yields in the southern part of the euro zone -- often tracked by Central Europe -- rose.
Increased risk aversion in international markets after Wednesday's weak Chinese manufacturing data and a revenue warning from Apple was reflected by a weakening of Central European currencies and some of its stock indices.
Warsaw led the decline in both asset classes, with its blue-chip stock index dropping 1.2 percent by 0949 GMT, still staying above its 90-day moving average, and the zloty shedding a quarter of a percent to 4.3027 per euro.
Bucharest stocks bucked the Asian and European trend and rose 1.5 percent in their first session in 2019.
The index has still regained only about a third of its losses suffered in a plunge in December after the government announced new taxes that hurt the earnings of companies in several sectors, including banks.
The leu eased 0.2 percent to 4.665 versus the euro.
The Romanian central bank may announce at its news conference after its January 8 meeting that it would tolerate a weaker leu than so far, ING analysts said in a note.
CEE MARKETS
SNAPSHOT
AT 1049 CET
CURRENCIES
Latest
Previous
Daily
Change
bid
close
change
in 2019
Czech crown
25.7400
25.7760
+0.14%
-0.13%
Hungary forint
322.4300
322.2500
-0.06%
-0.42%
Polish zloty
4.3027
4.2925
-0.24%
-0.30%
Romanian leu
4.6650
4.6576
-0.16%
-0.24%
Croatian kuna
7.4270
7.4200
-0.09%
-0.23%
Serbian dinar
118.3000
118.4000
+0.08%
+0.00%
Note: daily change
calculated from
1800 CET
Latest
Previous
Daily
Change
close
change
in 2019
Prague
990.93
989.3700
+0.16%
+0.44%
Budapest
39614.13
39734.06
-0.30%
+1.21%
Warsaw
2273.68
2301.62
-1.21%
-0.13%
Bucharest
7497.23
7383.68
+1.54%
+1.54%
Ljubljana
796.66
804.26
-0.94%
-0.94%
Zagreb
1726.37
1729.39
-0.17%
-1.28%
Belgrade
729.88
761.69
-4.18%
-4.18%
Sofia
585.37
586.12
-0.13%
-1.53%
BONDS
Yield
Yield
Spread
Daily
(bid)
change
vs Bund
change in
Czech Republic
spread
2-year
1.5360
0.0070
+215bps
+1bps
5-year
1.6400
-0.1090
+197bps
-11bps
10-year
1.7360
-0.0610
+156bps
-7bps
Poland
2-year
1.3900
0.0250
+200bps
+3bps
5-year
2.1970
-0.0130
+253bps
-1bps
10-year
2.7650
0.0170
+259bps
+1bps
FORWARD
RATE
AGREEMENT
3x6
6x9
9x12
3M interbank
Czech Rep
2.08
2.09
2.08
2.01
Hungary
0.29
0.52
0.76
0.13
Poland
1.74
1.75
1.75
1.72
Note: FRA quotes
are for ask prices
**************************************************************
($1 = 283.6700 forints)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.