September 24, 2018 / 9:56 AM / 23 days ago

CEE MARKETS-Currencies ease on Fed hike expectations, Warsaw stocks rise

    * U.S. interest rate hike mostly priced in 
    * Polish 10-year bond yield tests 3-1/2-month high
    * Polish stocks, now in STOXX Europe 600, rise 

    By Sandor Peto
    BUDAPEST, Sept 24 (Reuters) - Central European currencies
eased slightly on Monday on expectations that the U.S. Federal
Reserve will increase interest rates again this week.
    A U.S. hike on Wednesday is mostly priced in but may still
move regional currency and bonds markets which are also
vulnerable to shocks from regional and European inflation
figures, due out from Friday, analysts and dealers said.  
    The zloty led currencies lower, dropping 0.15
percent against the euro by 0850 GMT, to trade at 4.3085.
    The crown was also a shade weaker at 25.618, even
though the Czech central bank is expected to increase interest
rates at its meeting on Wednesday, delivering its third monthly
hike in a row.
    Government bond yields were steady or firmer and investors
will closely watch the Federal Reserve's comments, traders said.
    Poland's 10-year yield bid up 4 basis points
(bps) at 3.274 percent, only 1 bps from 3-and-1/2-month highs.
    Czech and Hungarian 10-year yields traded at multi-year
highs, while Poland may be next economy in the region where
inflation concerns increase and lead to a rise in long-term bond
yields, some analysts said.
    "As reflation trades are well entrenched in the rates
markets in Czechia and Hungary, investors may turn to Poland as
the next candidate," Bank of America Merrill Lynch analysts
wrote. 
    "We see some positive underlying movements, but still far
from triggering a hawkish turn by the National Bank of Poland,"
they wrote.
    Polish shares outperformed most Asian and European markets
which eased due to fears of a long U.S.-China trade war after
China decided to cancel talks.
    Warsaw's blue-chip index rose 0.8 percent, helped
by news that eight Polish stocks, including oil group PKN Orlen
 were added to the STOXX Europe 600 index,
Budapest-based Equilor brokerage analyst Zsolt Bosnyak said.
    PKN shares rose 1.6 percent.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1106 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.6400   25.6000    -0.16%    -0.38%
 crown      >                                       
 Hungary    <EURHUF=  323.9000  323.7500    -0.05%    -4.01%
 forint     >                                       
 Polish     <EURPLN=    4.3080    4.3020    -0.14%    -3.06%
 zloty      >                                       
 Romanian   <EURRON=    4.6570    4.6555    -0.03%    +0.49%
 leu        >                                       
 Croatian   <EURHRK=    7.4265    7.4265    +0.00%    +0.05%
 kuna       >                                       
 Serbian    <EURRSD=  118.1200  118.2000    +0.07%    +0.32%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1097.80  1101.710    -0.35%    +1.82%
                                       0            
 Budapest             35667.42  35783.48    -0.32%    -9.42%
 Warsaw                2275.78   2257.47    +0.81%    -7.53%
 Bucharest             8372.23   8382.72    -0.13%    +7.98%
 Ljubljana  <.SBITOP    850.08    860.20    -1.18%    +5.42%
            >                                       
 Zagreb                1804.36   1803.76    +0.03%    -2.09%
 Belgrade   <.BELEX1    731.69    733.02    -0.18%    -3.70%
            5>                                      
 Sofia                  623.48    623.48    +0.00%    -7.97%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.5330    0.0720   +208bps     +7bps
            R>                                      
   5-year   <CZ5YT=R    1.8550    0.0070   +200bps     -1bps
            R>                                      
   10-year  <CZ10YT=    2.1960    0.0000   +173bps     -1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5760    0.0000   +212bps     -1bps
            R>                                      
   5-year   <PL5YT=R    2.5490    0.0150   +270bps     +0bps
            R>                                      
   10-year  <PL10YT=    3.2740    0.0470   +280bps     +4bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                1.95      2.14      2.27      1.56
            <PRIBOR=                                
            >                                       
 Hungary                  0.42      0.67      0.93      0.19
                                                    
 Poland                   1.77      1.79      1.84      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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