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CEE MARKETS-Yields jump on Brexit, forint recovers on central bank comments

Sandor Peto

* Hungarian bond yields sharply reverse plunge Forint reverses early losses on central banker remarks

* Crown eases after mild PPI, defying hawkish central banker

* Leu weaker, central bank may have bought it - analysts

BUDAPEST, Jan 16 (Reuters) - Central European government bond yields rose on Wednesday due to a shake-up of positions after British Prime Minister Theresa May's plan for an orderly exit from the European Union collapsed in parliament on Tuesday. A disorderly British exit from the EU may hurt the region's trade, with Poland most exposed. Technical factors and thin turnover are also making Hungary's forint vulnerable to shifts in sentiment, dealers said. The currency, which made several failed attempts in the past three weeks to break through resistance around 321 versus the euro, touched a one-month low of 324.25 in early trade. But it had rebounded to 322.5 by 1036 GMT, up 0.2 percent from Tuesday, after Hungarian central bank (NBH) Deputy Governor Marton Nagy said the bank could start to normalise policy if core inflation rises above 3 percent. A sharp retreat in inflation in Central Europe in the past months, driven by a fall in crude prices, helped government bond yields track a plunge in U.S. and German yields, led by Hungary. The country's 10-year yield fell further on Tuesday, dipping below the corresponding Polish yield the first time since June last year, after December figures showed a surprise fall in annual headline inflation to 2.7 percent. But a sell-off after the Brexit vote fully erased the 10 basis point decline on Wednesday, when the bonds traded at 2.82 percent, up 14 basis points from Tuesday's fixing. A rise in core inflation to near the NBH's 3 percent target shifted into the focus of attention, market participants said.

"There is a gradual increasing tendency," KBC analysts said in a note. "(Core inflation figures) suggest that the room to maintain the current loose monetary policy is disappearing," they added. Poland's 10-year yield, which reached par with U.S. Treasuries on Tuesday, rose 2 basis points to 2.757 percent, compared with their U.S. peer's 2.735 percent. The zloty rebounded from an early fall to trade up 0.2 percent at 4.286 versus the euro. The crown was down 0.1 percent at 25.577, after Czech industrial producer price growth slowed to 2.4 percent, below analysts' 3.2 percent forecast, even though central banker Vojtech Benda said rate increases could continue. The leu was also a touch weaker at 4.6838. Analysts said the Romanian central bank, which smoothes the currency's volatility in a managed float regime, may have intervened in the market on Tuesday when the leu tested 4.69, its weakest since June last year.



Latest Previous Daily Changebid close change in 2019Czech <EURCZK= 25.5770 25.5420 -0.14% +0.51%crown >Hungary <EURHUF= 322.5000 323.2000 +0.22% -0.44%forint >Polish <EURPLN= 4.2860 4.2937 +0.18% +0.08%zloty >Romanian <EURRON= 4.6838 4.6807 -0.07% -0.64%leu >Croatian <EURHRK= 7.4270 7.4270 +0.00% -0.23%kuna >Serbian <EURRSD= 118.3000 118.3900 +0.08% +0.00%dinar >Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Prague 1008.18 1004.030 +0.41% +2.19%


Budapest 40585.27 40600.26 -0.04% +3.70%Warsaw 2346.74 2344.56 +0.09% +3.08%Bucharest 7060.92 7060.24 +0.01% -4.37%Ljubljana <.SBITOP 823.49 818.34 +0.63% +2.39%>Zagreb 1751.22 1747.60 +0.21% +0.14%Belgrade <.BELEX1 697.81 697.73 +0.01% -8.39%


Sofia 563.68 565.56 -0.33% -5.18%


Yield Yield Spread Daily(bid) change vs Bund change


Czech spread


2-year <CZ2YT=R 1.7300 -0.0330 +234bps -4bps


5-year <CZ5YT=R 1.7580 0.0580 +210bps +4bps


10-year <CZ10YT= 1.8040 0.0370 +158bps +1bps

RR> Poland

2-year <PL2YT=R 1.3630 0.0080 +198bps +1bps


5-year <PL5YT=R 2.1940 0.0260 +254bps +0bps


10-year <PL10YT= 2.7840 0.0250 +256bps +0bps




3x6 6x9 9x12 3M

interban k

Czech Rep 2.15 2.19 2.20 2.01



Hungary 0.26 0.48 0.69 0.13Poland 1.72 1.72 1.73 1.72

Note: FRA are for ask prices quotes



(Additional reporting by Radu Marinas in Bucharest; Editing by Mark Potter)