Erste Bank Research Team
Erste Bank
Hungarian central bank is the key event this week and we expect no change in the key policy rate that is at 6.5%. October’s inflation went up to 3.2% y/y and the Hungarian forint has been weak lately. Other than that, it will be rather light weak regarding data releases. In Czechia and Slovenia, producer prices will be releases. Further, labor market data are due. In Slovakia and Croatia, unemployment rate for October will be published. In Croatia, Hungary and Slovenia wage growth will be released for September. Finally, Slovakia will publish current account data for September.
FX market developments
The weakening trend form the beginning of the week was reverted and EURHUF went to 405, while EURPLN to as low as 4.31 on Friday. The recent statement of Federal Reserve Chair Powell supports such development. He said that the economy was not sending any signals that we need to be in a hurry to lower rates.
This week, the Hungarian central bank is the key event in the region. We expect the key policy Rate to remain stable at 6.5% as inflation inched up in October and the EURHUF holds above 400.
Bond market developments
The situation on the CEE bond market was rather calm this week with one exception – Romania. While 10Y yields hardly changed this week in CEE (or slightly declined in Hungary), the ROMGB curve moved up about +20bp w/w. 10Y yield on ROMGBs topped 7% last week (one-year high), getting 40bp above yield on 10Y HBGs. Disappointing flash GDP growth would normally call for lower rates and yields in Romania, but uncertainty surrounding future fiscal prospects and consolidation measures weighed on Romanian bonds. Croatia has advanced in filling its order book for 1Y retail bonds with targeted volume of EUR 1.2bn. They should yield 3.15% and be tax-free. This week, Slovakia is to reopen SLOVGBs 2028, 2033, 2034, 2036 and Romania should reopen ROMGBs 2026, 2027 and 2035. Hungary will offer various T-bills on top of regular T-bond auctions and Croatia will sell T-bills too.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
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