April 22, 2014 | Cbonds
CEE FX: During yesterday’s session, the Hungarian forint stood out as the worst performer amongst CEE currencies. There was no real news behind this development, apart from some worrying news flow regarding the Russian-Ukrainian situation. However, the latter should theoretically affect all CEE currencies and not just the forint.
CEE Fixed Income: Low activity over the Easter holiday means we have relatively little to report in terms of price movements over the extended weekend. In terms of potentially market moving economic data this week, the calendar looks quite thin. Confidence data may give us the first indication how the real economy is reacting to the crisis in Ukraine and March Retail Sales data in Poland is expected to come in weaker than the prior month according to a survey run by Bloomberg. Weaker economic data would likely amplify the curve flattening trends that have been prevalent across CEE fixed income year-to-date. Positive surprises in the unemployment rate over the last 3 months points to an improving labour market in Poland and the revision to recent GDP data showed a shift towards a larger contribution to growth from domestic demand and, hopefully, a broadening of the recovery. This should bode well for retail sales so if the numbers disappoint, long-dated POLGBs, which have been lagging Bunds and other CEE fixed income markets as of late, may be in for arenaissance. Of the 23 analysts surveyed, the lowest estimate is 4.1% and the highest is at 7.4% vs 7.0% in the prior month. The median estimate is around 5.9% with the distribution skewed to the upside.