February 28, 2019 / 10:48 AM / 18 days ago

CEE MARKETS-Currencies steady near multi-week highs, stocks mixed

    By Sandor Peto
    BUDAPEST, Feb 28 (Reuters) - Central European currencies
steadied near multi-week highs on Thursday, supported by a
weakening of the dollar and ahead of a government bond
auction in Hungary that saw solid demand.
    The forint traded a touch firmer against the euro
at 316.45 at 0939 GMT and may soon head towards 9-1/2-month
highs at 315, market participants said.
    Expectations that the Hungarian central bank could start to
nudge short-term market interest rates slowly higher next month
has buoyed the forint.
    The region's currencies also drew support this week from the
comments of Federal Reserve head Jerome Powell who stuck to a
"patient" stance on further U.S. interest rate increases.
    Hungarian government bonds steadied after some rise in
yields on Wednesday tracking U.S. and German yields.
    The Hungarian debt agency AKK sold 88.5 billion forints
worth of government bonds at an auction on Thursday
, 18.5 billion forints more than the original
offer, and will also hold a top-up sale later in the day.
    The government offered a new 3-year paper at the auction
which was only the second sale of a new 10-year bond.
    Demand was moderate for the new paper, as usual, and strong
for the 5- and 10-year bonds. The 5-year bond was sold at 2.21
percent, a slightly lower average yield than two weeks ago,
while the 10-year yield rose 2 basis points to 3.16 percent.   
    Comments by Prime Minister Viktor Orban on Wednesday that
all state debt should be held by Hungarians in the longer term
is unlikely to deter foreign investors, one Budapest-based
trader said.
    "We are still analysing what that could mean, together with
the central bank's 300-page proposal (to enhance the economy's
competitiveness)," the trader said.
    Elsewhere, the zloty firmed 0.1 percent to 4.3125
versus the euro, while Polish government bond yields resumed
Monday's rise after the ruling Law and Justice party, preparing
for elections, signalled a spending spree.
    The 10-year Polish bond yields rose to 2.837 percent from
Wednesday's 2.814 percent close.
    The finance ministry is expected to work out the details of
the planned tax reform by the end of the week, the daily
Dziennik Gazeta Prawna said.
    Central European markets including stocks were rangebound
and mixed, while MSCI's emerging market share index
fell 0.6 percent as hopes faded for a U.S.-China trade deal and
the U.S.-North Korea summit brought no success.
    Budapest's main index fell 0.3 percent, driven by OTP
Bank shares, which briefly pierced a key resistance
level at 11,850 forints on Wednesday but retreated to 11.650
forints on Thursday.
    The Budapest-based regional bank, which reported a new
acquisition on Thursday, is due to report fourth-quarter
earnings early on Friday.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1039 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6280   25.6450    +0.07%    +0.31%
 crown      >                                       
 Hungary    <EURHUF=  316.4500  316.5000    +0.02%    +1.46%
 forint     >                                       
 Polish     <EURPLN=    4.3125    4.3155    +0.07%    -0.53%
 zloty      >                                       
 Romanian   <EURRON=    4.7410    4.7400    -0.02%    -1.84%
 leu        >                                       
 Croatian   <EURHRK=    7.4280    7.4295    +0.02%    -0.24%
 kuna       >                                       
 Serbian    <EURRSD=  117.9700  118.1100    +0.12%    +0.28%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1064.92  1067.330    -0.23%    +7.94%
                                       0            
 Budapest             40407.33  40525.28    -0.29%    +3.24%
 Warsaw                2343.94   2333.81    +0.43%    +2.96%
 Bucharest             7671.88   7668.80    +0.04%    +3.90%
 Ljubljana  <.SBITOP    843.06    844.13    -0.13%    +4.82%
            >                                       
 Zagreb                1791.14   1780.86    +0.58%    +2.42%
 Belgrade   <.BELEX1    680.00    684.52    -0.66%   -10.72%
            5>                                      
 Sofia                  587.07    588.41    -0.23%    -1.24%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8550    0.0680   +240bps     +6bps
            R>                                      
   5-year   <CZ5YT=R    1.8110    0.0020   +214bps     +0bps
            R>                                      
   10-year  <CZ10YT=    1.9460    0.0320   +179bps     +3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6440    0.0110   +219bps     +1bps
            R>                                      
   5-year   <PL5YT=R    2.3060    0.0190   +263bps     +1bps
            R>                                      
   10-year  <PL10YT=    2.9100    0.0020   +275bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.26      2.33      2.35      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.38      0.62      0.81      0.15
                                                    
 Poland                   1.74      1.73      1.74      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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