Flash CPI numbers and retail sector performance

Erste Bank Research Team Erste Bank

This week, June’s flash CPI will be published for Croatia, Slovakia and Slovenia (HICP within flash estimate for euro are) and for Poland. Further decline of headline numbers is broadly expected. Slovenia and Croatia already entered the single-digit territory in May. Apart from that, data for May for retail sector will be published in Croatia, Slovenia and Serbia. In Croatia, another strong growth dynamics is expected while in Serbia and Slovenia headline figures are expected in the red. Further, industrial output growth for May will be released in Croatia and Serbia and we expect negative trend to persist as the manufacturing sector remains under pressure. Finally, we will see May’s unemployment rates in Poland and Romania as well as producer prices in Slovakia and Hungary.

FX market developments

The Czech koruna, the Hungarian forint and the Polish zloty continued to strengthen against the euro throughout the week. Czech and Polish currency gained as much as o.5% against the euro while Hungarian forint outperformed the peers strengthening by 1% vs. the euro. This week, there are no major releases scheduled in the region that could impact the FX market we thus expect global factors to remain dominant. The common trend of all three floating currencies suggests that global development dominates the FX market moves. Developments in Russia over the weekend left little mark on the CEE currencies so far.

Bond market developments

CEE government bond yields followed the decline of yields on major markets last week. The strongest move could be seen on the POLGB yield curve, where the 5-10Y segment fell 20-25bp w/w. The ROMGB yield curve also shifted down about 15bp w/w. In Hungary, only short-term government securities showed a more visible decline, while FRAs hardly reacted to the 100bp rate cut delivered last week. The Hungarian debt agency continued to be very active on the local market, offering mainly T-bills and floaters. The latter was sold at a much bigger amount, HUF 36bn, than the initially planned HUF 15bn. This week, Romania will reopen ROMGBs 2026, 2028 and 2031, while Poland will offer POLGBs 2028, 2033, plus a zero-coupon bond 2025 and floater 2028. Czechia will also offer one floater on top of the regular bond, while Hungary will continue issuing T-bills.

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Erste Bank Research Team

Erste Bank

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