News
CZ: Neutral – 3Q C/A deficit posted negative CZK 42.2bn, FDI came in at CZK 5.3bn (p2)
RO: Positive – MinFin sold 2Y T-Bonds worth RON 743mn vs. RON 700mn planned: bid/cover 2.7, avg. yield 7.15% / Mixed – Oct IP growth decelerated to 4% yoy (p2)
LV: Positive – IMF released statement fowling IMF/EU joint mission visit to Latvia from 28 Oct to10 Nov (p2)
Today’s Events
CZ: 3Q GDP (final), Nov CPI / ES: 3Q GDP (final), 3Q C/A / HU: 3Q GDP (final), Oct trade balance (prelim) / KZ: Oct real wages / LT: Oct trade balance / LV: 3Q GDP (final), Nov unemployment / RU: Budget level YTD / SK: Oct trade balance, Oct real wages, / SL: Oct IP, Oct trade balance
EEMEA Markets
* Global backdrop: although part of the ECB rate decision and statement was in line with expectations Draghi’s comments to cool down extended ECB bond purchase expectations led to a sharp sell-off in risky assets. CEEMEA was badly hit with currencies 1-2pct weaker whilst local bond markets turning sharply weaker (HGB underperformed with yields jumping 40-50bp). The poor mood has been carried over to the Asian session as well with equities down 1.5pct. CEEMEA FX opened another 1% weaker this morning. Today focus remains on EU developments and potential comments during the day from the Summit.
* Local currency markets: HGB underperformed yesterday as yields jumped about 40-50bp whilst EUR/HUF moved to 308.00. The head of the IMF delegation, Fellegi, resigned from his Development Minister position yesterday citing focus on upcoming negotiations. We think this might lead to some broader reshuffling of the government which could eventually lead to the removal of the EconMin from his current post. Other local markets were also rather week yesterday with PLN rates jumping around 10-15bp. As we argued earlier this week we think risk reward for POLGBs is deteriorating as they could potentially underperform in either the positive or the negative EMU outcome. In Russia today the CBR increased its limit for its direct repo transaction to RUB130bn whilst demand stood at RUB200bn. The move underlines ongoing liquidity tensions in the RUB market.
* EM bond fund flows: data published this morning suggest that EM bond fund flows recovered somewhat compared to last week’s USD700mn outflow. This week hard currency funds saw inflow of USD134mn whilst local currency funds USD84mn.
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/12/EEMEA-daily-091211_MS.pdf
Gyula Toth
UniCredit Research