Top Stories
Top Stories
Wires

CEE MARKETS-Polish yields at three-week high, central bank seen on hold

Sandor Peto

* Long-term CEE yields continue to track UST yield rebound

* Polish central bank seen keeping record-low rates on hold

* Pressure eased on CPI, increased on central bank chief in Warsaw

* OTP Bank, Budapest stock index approach record highs

BUDAPEST, Jan 9 (Reuters) - Poland's 10-year government bond yield hit a three-week high of 2.8955 percent on Wednesday as Central European yields tracked a continuing rebound in U.S. Treasuries yields. Local markets ignored a Polish central bank meeting, with criticism of Governor Adam Glapinski stealing the show from interest rates. The bank is expected to keep its record-low benchmark rate on hold at 1.5 percent, after annual inflation fell further below its 1.5-3.5 percent target to 1.1 percent in December. The zloty was little changed near the 4.3 psychological line against the euro. It faltered in recent days as pressure mounted on Glapinski to publish details of the pay of a key aide, after a newspaper reported it was very high by Polish standards. "At this stage this (Glapinski's resignation) is an unlikely scenario unless the 1/8ruling party 3/8 PiS concludes that perhaps there are too many controversies that make Glapinski a major liability," Rabobank analyst Piotr Matys said in a note. If ongoing investigations and attacks worsen the governor's position and he still refuses to quit, "this in turn could undermine the credibility of the NBP and could weigh on the zloty," Matys said. Elsewhere, the Czech Republic's government bond auction was expected to draw healthy demand on Wednesday despite the regional rebound in yields this year, helped by attractive asset swap spreads which also boosted demand at a Hungarian auction last week, traders said. Most currencies and equities in the region gained as appetite for risk grew in global markets, amid hopes the United States and China were inching towards a trade deal. Budapest led gains, with its blue-chip stock index rising 0.6 percent. The index set a one-year high and got near record highs, driven by OTP, the region's biggest independent lender, which traded at 11,770 forints, near record highs beyond 11,850 forints.

CEE SNAPSHOT ATMARKETS 1123 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2019Czech <EURCZK= 25.6200 25.6500 +0.12% +0.34%crown >Hungary <EURHUF= 321.7000 321.9000 +0.06% -0.19%forint >Polish <EURPLN= 4.2975 4.3005 +0.07% -0.18%zloty >Romanian <EURRON= 4.6725 4.6685 -0.09% -0.40%leu >Croatian <EURHRK= 7.4250 7.4325 +0.10% -0.20%kuna >Serbian <EURRSD= 118.1500 118.3600 +0.18% +0.13%dinar >Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Prague 1019.04 1014.360 +0.46% +3.29%

0

Budapest 41049.56 40809.82 +0.59% +4.88%Warsaw 2328.30 2325.19 +0.13% +2.27%Bucharest 7523.31 7484.70 +0.52% +1.89%Ljubljana <.SBITOP 803.66 805.85 -0.27% -0.07%>Zagreb 1739.57 1732.66 +0.40% -0.53%Belgrade <.BELEX1 709.46 718.24 -1.22% -6.86%

5>

Sofia 573.56 577.33 -0.65% -3.52%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 1.8130 0.1340 +239bps +14bps

R>

5-year <CZ5YT=R 1.7860 0.0460 +207bps +4bps

R>

10-year <CZ10YT= 1.8390 0.0140 +160bps +1bps

RR> Poland

2-year <PL2YT=R 1.4810 0.0060 +206bps +1bps

R>

5-year <PL5YT=R 2.3460 0.0290 +263bps +2bps

R>

10-year <PL10YT= 2.9000 0.0440 +266bps +4bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 2.09 2.19 2.21 2.01

<PRIBOR=

>

Hungary 0.27 0.50 0.74 0.13Poland 1.74 1.77 1.77 1.72

Note: FRA are for ask prices quotes

*************************************************

*************

(Reporting by Sandor Peto, editing by Larry King)