News
PL: Mixed – June wage growth accelerates to 5.8% yoy from 4.1% yoy in May (p2)
KZ: Positive – The state budget deficit narrows to 0.9% of GDP in 1H2011 from 1.6% of GDP the year before (p2)
Today’s Events
BG: June Unemployment / HU: May Wages/ PL: June IndOut, June PPI SRB: RSD 12.4bn 3Y GB auction / RU: Budget lvl YTD, June Wages and Income, June Unemployment rate, June Retail Sales / TK: 2013 and 2020 GB auctions
EEMEA Markets
Lot of focus on CHF/HUF as the cross hit fresh all time highs. A quick reminder from the NBH’s financial stability report from April. In the stress scenario in that report HUF finishes the year at 245/CHF, while finishing next year at 257/CHF. In this scenario the banking sector needs HUF83bn to bring capital ratio to 8 percent, HUF167bn to bring capital ratio to 9 percent. Although in our view this is manageable the ongoing upside pressure on CHF/HUF is obviously keeping Hungarian markets under pressure and this represents a significant mark to market risk to our local currency bond recommendation.
In Poland June saw a marked increase in the annual private sector wage growth rate – to 5.8% yoy from 4.1% yoy in May (above market expectations). The rise was attributable largely to the mining sector – on the one hand in relation to the strong effect of last year’s low statistical base (in 2010 the payment of bonuses took place in May and June registered a sharp fall in average wages in monthly terms), and on the other to the fact that the base wage in many large enterprises in this sector rose in June (including Kompania Weglowa, JSW) on growing pressure from the unions, driven by rising inflation expectations. Employment in the corporate sector in June stabilized the annual growth rate at 3.6% yoy, while in monthly terms employment grew 0.2% mom. The June reading is a positive signal indicating that weakening foreign demand, which to date was largely responsible for job creation in the manufacturing sector, is being offset by strengthening domestic demand. This translates into continued employment growth, albeit at a slower pace than last year. June labor market data brought a significant increase in the real wage bill growth rate – up to 5.1% yoy from 2.8% yoy in May. In the context of monetary policy, today’s data have a “hawkish” overtone, highlighting the threat of second-round effects, and thus support expectations of another interest rate hike this year, the possibility of which has been signaled by the Monetary Policy Council.
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/07/eed_fi_190711_0000.pdf
UniCredit Research