News
BG: Mixed – Activity indicators disappointed in November; MinFin sells BGN 50mn of 10½Y GBs at 5.35% (p2)
CZ: Neutral – Dec CPI came in at 2.4% yoy / Nov retail sales expanded 0.5% yoy (p2)
KZ: Positive – GDP growth was 7.5% in 2011, Prime Minister Karim Massimov wrote on Monday (p3)
RO: Mixed – Nov retail sales declined by 1% mom sa (1.9% yoy) / Nov unemployment rate came in at 7.3% / MinFin sold RON 2.38bn of 1Y T-Bills: avg. yield 6.23%, bid/cover 1.9 / 11M11 exports grew 22.5% yoy (p2)
TK: Neutral – Nov IP came in at 8.4% yoy (p2)
Today’s Events
ES: Dec unemployment, Nov trade balance / CR: Dec PPI, EUR 10mn and HRK 150mn T-Bills auctions / HU: HUF 45bn 3M T-Bill auction, non-rate setting MPC meeting / KZ: Dec IP / LV: Dec unemployment / PL / RO: Nov IP / RU: International reserves / SRB: RSD 10bn 53W T-Bills / SK: Nov IP
EEMEA Markets
* Global backdrop: Yesterday, equities remained weak while Bunds were little changed. USTs were better supported, with 10Y yields falling 4bp to 1.92%. Germany sold a 6M bill at a negative rate. BTPs were under pressure; the 10Y BTP/Bund spread rose to 530bp. Asian equities closed somewhat higher. Today, Merkel and German Finance Minister Schäuble will meet IMF’s Lagarde. They are likely to discuss the situation in Greece and the planned EUR 200bn increase of IMF resources.
* Following the sharp EUR weakness YTD the EUR/USD cross hit our colleague’s initial targets for 1Q12 and 2Q12 at 1.30 and 1.28 more rapidly than they anticipated. Given the current EMU and US scenario, they revised their forecast below 1.20. The implication for CEEMEA markets is to maintain overweight in countries which currencies are USD referenced vs. countries where the currencies are EUR referenced. Partly on the back of this we remain short EUR/TRY with target at 2.30.
* Hungary: today the MPC will hold non-rate setting meeting. We expect no change in rates particularly as market tensions eased following the relatively constructive announcements late last week. We nevertheless do not rule out that the MPC will issue a relatively cautious statement (normally they do not issue it following non-rate setting meetings). Meanwhile all eyes on the meetings between IMF and Fellegi in Washington. Today the AKK will also auction 3M t-bill (HUF45bn). Despite the increasing FX implied yields YTD (3M up about 80bp) we currently calculate that the FX hedged t-bills provide about 300bp positive carry which is effectively the local currency credit risk. The 300bp is about 150bp above the last 12M average of this carry.
* Serbia: today is the first 53week t-bill auction since November 2011. RSD10bn will be on offer. Following the sharp depreciation of the RSD at the end of the year we expect relatively strong demand and yield level around 12.70/90% below the latest avg yield at 13%. Although RSD corrected about 3% YTD we still see the t-bills it relatively attractive.
Click here to read full report: EEMEA Eco Daily 100112
Gyula Toth, UniCredit