News
HU: Mixed – Econ committee submits eight changes to disputed central bank law (p1)
PL: Mixed – Nov IP growth accelerates to 8.7% yoy / Nov PPI accelerated to 8.9% yoy (p2)
RO: Positive – MinFin sells 1Y T-Bills RON 1.7bn (RON 1.3bn planned): avg. yield 6.55%, bid/cover 2.2 (p2)
Today’s Events
ES: Nov PPI / CR: 3Q GDP (final) / HU: HUF 30bn 3M T-Bill auction, NBH MPC rate decision / LT: 3Q C/A / PL: Nov core CPI / RU: Nov labour market statistics, Nov retail sales, Nov productive capacity investments / UA: USD-denominated 1Y, 3Y and 5Y GB, 6M and 9M T-bill, USD-linked 1Y, 1.5Y, 3Y and 5Y, UAH 1.5Y GB auctions
EEMEA Markets
NBH MPC meeting in focus today: we see the policy rate on hold this time around vs market consensus of a hike. We believe 50bp rate hikes to make up for shortfalls within the government in terms of delivering an IMF programme is not a strategy that can work for too long while market pressures do not justify a larger hike. Relative to the NBH’s end-November rate decision, EUR/HUF is lower, the government has managed some domestic auctions, foreign holdings of HGBs have stabilised and sovereign CDS spreads are moderately lower. That said a rate hike is likely to be discussed. We also expect ongoing focus on the progress of the NBH law change. Yesterday the Economic Committee submitted eight changes to the draft law citing ECB comments. Meanwhile later on the day a letter from EU Barroso to PM Orban appeared on local websites (www.origo.hu) where he was asking a full withdrawal of the law proposal. Although not confirmed pressure is clearly increasing on Orban to deliver. Given little alternative choice we still see scope for short squeeze in EUR/HUF and continue recommend buying put options (as one of our top trades for 2012). Today the AKK will sell HUF30bn 3m t-bills. The carry on a fully FX hedged t-bill position remains very attractive, around 310bp according to Bloomberg mid prices.
Kazakhstan riots: The events look serious enough to mark some turning point in Kazakhstani politics, even if protests will be contained and elections be held as scheduled and the ruling Nur Otan party will win the overwhelming majority. There will be heightened fear now among the ruling elite of an Arab Spring – though probably little warranted given that the middle class is doing relatively well and the rural poor are not the ones to organize revolutions. This might lead to more control of the public opinion, a further centralization, a higher role of the special services etc., which is negative from an investor’s point of view. However, at the same time there might be efforts to faster increase wages, speed investment in housing, running water and other infra-structure to appease the population.
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/12/EEMEA-daily-201211.pdf
Gyula Toth / Hans Holzhacker
UniCredit Research