S&P to review Slovakia's rating

Not very much is going on after Easter in the region. In several CEE countries, labor market data will be released, such as the unemployment rate (Slovakia, Poland, Croatia and Hungary) and wage growth (Poland, Croatia and Serbia). Apart from that, Poland will publish data on the performance of retail and the industry sector in March. The highlight of the week will be Slovakia’s review by S&P, which currently rates the country two notches above Moody’s and Fitch Ratings. We see a somewhat elevated likelihood of a negative outlook, while a downgrade scenario appears unlikely, though it cannot be entirely ruled out.

FX market developments

The FX market remains volatile, still reeling from the global tariff turmoil. Last week, CEE currencies strengthened against the euro, bolstered by the ECB's rate cut and a weakening dollar. U.S. President Trump has criticized the FED Chairman for not reducing interest rates quickly enough. Trump's recent comments were notably personal and directive, heightening market concerns about political interference in FED policy-making, which could lead to more persistent inflation in the U.S.

Bond market developments

In line with our and market expectations, the ECB cut key interest rates by 25bp last week. 10Y German Bund yields fell further below 2.5% as the ECB sent rather dovish signals. On CEE LCY bond markets, only Czech and Poland’s 10Y yields followed the decline (nearly 10bp w/w), while yields on other markets barely moved. This week, we expect rather heavy bond issuance in the CEE region. Slovakia will reopen SLOVGBs 2028, 2034, 2035, and 2047. Romania will reopen ROMGBs 2026 and 2031. Czechia will reopen CZGBs 2037 and 2044, and launch a new 10Y benchmark. Hungary will offer HGBs 2029 and 2032 floaters. Poland will reopen POLGBs 2027, 2029, 2030, and 2034, and launch a new 5Y benchmark. Czechia and Hungary will also be selling T-bills.

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