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CEE MARKETS-Inflation worries drive Polish and Hungarian bond yields higher

05/12/2021 05:35
CEE MARKETS-Inflation worries drive Polish and Hungarian bond yields higher

By Anita Komuves

- Inflation fears dominated the market mood in central Europe on Wednesday as investors awaited U.S. CPI data later in the day, while government bond yields in Poland and Hungary rose on worries about stronger-than-expected domestic price rises.

"Soaring inflation in CEE together with a solid economic recovery are fueling expectations for rate hikes, which are pushing yields further up," Erste Bank wrote.

Hungary and the Czech Republic reported higher-than-expected CPI numbers for April on Tuesday, while Romania is due to announce new inflation forecasts on Friday that are likely to show a sharp rise for 2021.nL1N2MY0XZnL1N2ML16X

Polish inflation jumped to 4.3% in April, above the upper end of the central bank's target range. nL8N2MN2V1

Long-term Hungarian government bond yields rose about 10 basis points on Tuesday after the inflation data and were stable on Wednesday morning, two traders said.

"High CPI was a strong sign that the central bank might not be able to calm every big wave in the market, which prompted investors to sell," one fixed-income trader said.

"The market is now waiting for the minutes of the central bank's latest meeting this afternoon before deciding on the next move."

The yield on the Hungarian 10-year government bond was 2.85% on Wednesday. The 15-year yield was 3.35% while the 20-year bond's yield was 3.42%.

The Hungarian forint EURHUF= edged up but continued to hover around 358 per euro.

Polish bond yields also rose on Tuesday due to concerns about inflation and increased expectations of rate hikes, with 5-year government bond yields PL5YT=RR rising 18 basis points to a 13-month high.

The 5-year yield retreated 5 basis points on Wednesday.

The zloty EURPLN= was 0.18% firmer and trading at 4.5430 per euro a day after the Supreme Court delayed a decision on how courts should treat cases involving foreign currency loans. [nL1N2MY0JC

Poland's central bank is offering to buy bonds worth 10 billion zlotys on Wednesday.

The Romanian leu was stable ahead of a rate-setting meeting later in the day where analysts expect no change.nL8N2MU3OZ

Stock markets in the region were mixed after losses in the previous session. Prague .PX gained 0.41% while Budapest .BUX slid 0.25% and Warsaw .WIG20 was down 0.63%.





CEE MARKETS

SNAPSHOT

AT 1102 CET






CURRENCIES







Latest

Previous

Daily

Change




bid

close

change

in 2021

EURCZK=

Czech crown

EURCZK=

25.5350

25.5510

+0.06%

+2.72%

EURHUF=

Hungary forint

EURHUF=

358.0000

358.6500

+0.18%

+1.32%

EURPLN=

Polish zloty

EURPLN=

4.5430

4.5485

+0.12%

+0.36%

EURRON=

Romanian leu

EURRON=

4.9275

4.9270

-0.01%

-1.27%

EURHRK=

Croatian kuna

EURHRK=

7.5220

7.5240

+0.03%

+0.34%

EURRSD=

Serbian dinar

EURRSD=

117.4800

117.5800

+0.09%

+0.08%


Note: daily change

calculated from


1800 CET












Latest

Previous

Daily

Change





close

change

in 2021

.PX

Prague

.PX

1110.41

1105.9300

+0.41%

+8.11%

.BUX

Budapest

.BUX

44241.66

44350.67

-0.25%

+5.07%

.WIG20

Warsaw

.WIG20

2097.16

2110.48

-0.63%

+5.70%

.BETI

Bucharest

.BETI

11704.21

11695.86

+0.07%

+19.36%

.SBITOP

Ljubljana

.SBITOP

1066.08

1061.41

+0.44%

+18.34%

.CRBEX

Zagreb

.CRBEX

1950.33

1950.84

-0.03%

+12.13%

.BELEX15

Belgrade

.BELEX15

758.31

755.94

+0.31%

+1.30%

.SOFIX

Sofia

.SOFIX

517.93

515.34

+0.50%

+15.73%











Yield

Yield

Spread

Daily




(bid)

change

vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

0.5810

0.0060

+125bps

+0bps

CZ5YT=RR

5-year

CZ5YT=RR

1.4260

-0.0500

+198bps

-4bps

CZ10YT=RR

10-year

CZ10YT=RR

1.8110

0.0030

+198bps

+1bps


Poland






PL2YT=RR

2-year

PL2YT=RR

0.1590

-0.0030

+083bps

-1bps

PL5YT=RR

5-year

PL5YT=RR

1.1570

-0.0390

+171bps

-3bps

PL10YT=RR

10-year

PL10YT=RR

1.8090

-0.0200

+198bps

-1bps



FORWARD








3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

0.64

0.97

1.31

0.36


Hungary

HUFFRABUBOR=

0.97

1.14

1.32

0.79


Poland

PLNFRAWIBOR=

0.28

0.34

0.46

0.21


Note: FRA quotes

are for ask prices





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






(Additional reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Kim Coghill)

(([email protected])(+36 70 795 8815))

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