News
BG: Mixed – Oct retail sales drop -2.6% yoy / Oct IP advances 2.4% yoy (p2)
CZ: Negative – Investor bids in the auction for CZGB VAR/23 amounted to CZK 5.65bn, below the CZK 7bn volume indicated for sale / Oct IP growth slowed to 1.7% yoy (p2)
PL: Neutral – MPC kept interest rates unchanged, reference rate at 4.50% (p2)
RO: Mixed – Oct net wages rose 8.7% yoy (5% in real terms) / Oct industrial orders grew 1.1% yoy / Oct construction output fell 0.3% yoy (p2)
Today’s Events
CZ: Nov unemployment, 3Q C/A / ES: Nov unemployment / CR: Nov PPI / HU: HUF 5bn 2015/B and HUF 30bn 12M T-Bill auction / LN: Nov CPI / LV: Nov CPI / LN: Nov CPI / RO: Oct IP, RON 700mn 2013 ROMGB auction / SRB: Policy rate decision, RSD 4bn 6M T-Bill auction / SK: Oct IP / TK: Oct IP
EEMEA Markets
Global backdrop: the main event of the day will be the ECB meeting where our colleagues expect a 25bp rate cute, a long term (potentially 2-3y) LTRO) and probably easing collateral requirements as well as – maybe – a program to buy back bonds. We think this could provide a positive impetus for CEEMEA markets although the mood in the markets is still determined by the expectations regarding the weekend EU summit. With European equity markets opening on a firm footing we expect unchanged to slightly positive trading of CEEMEA markets.
Russia – first step toward Euroclearable OFZs: yesterday the CBR put out a statement where they indicated that OFZs will be allowed to trade outside of the MICEX as of 1st of January. Although this does not mean OFZs will be Euroclearable as soon as January we think this is an important step toward this direction. We think this could be a landmark event for the Russian local currency bond market given the access of international investors so far was heavily constrained by the MICEX local settlement ect. rules. Currently the MICEX traded OFZ 2018 paper is trading about 100bp wider yield than the same maturity Russia RUB 18 paper. Timing wise our local colleagues suggest that the full implementation of Euroclear could potentially take another 6-9 months.
Poland: the NBP MPC left interest rates unchanged in line with our and market consensus. In our reading the statement was relatively balanced and hence failed to provide any direction for the POLGB market. As we highlighted in our yesterday’s daily we believe risk reward is deteriorating on POLGBs even if the MPC cuts rates early next year given both EMU debt crisis outcome would likely hurt medium term PLN rates. We hence are becoming more cautious on POLGB and see the 04/2016 POLGB paper as most at risk from this perspective.
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Gyula Toth
UniCredit Research