CEE MARKETS-Polish assets hit one-month lows ahead of U.S. data

09/02/2016 5:21

* Polish 10-year bonds, zloty, stocks set one-month lows * U.S. payrolls data may cut appetite for regional assets * Poland underperforms due to domestic risks * Czech bonds mixed after detailed Q2 economic output figures By Sandor Peto BUDAPEST, Sept 2 (Reuters) - Central European currencies and government bonds eased on Friday as investors awaited U.S. payrolls figures that may boost expectations for a Federal Reserve rate hike this month, which could cut appetite for emerging markets assets. Hungary's 10-year government bond yield jumped 7 basis points from Thursday's fixing to 2.97 percent. The bonds attracted unusually heavy demand at an auction on Thursday and the government lifted the offered amount, after a rise in bond yields in the region in the past two weeks as expectations strengthened for U.S rate hikes. "If U.S. payrolls are stronger than expected, the yield can easily rise above 3 percent," one Budapest-based fixed income trader said, adding that weak figures could send the yield back to about 2.9 percent. Poland's corresponding bonds also extended losses, with their yield rising 3 basis points to one-month highs at 2.84 percent. Hungary's forint eased 0.2 percent against the euro to 310.45, but against the zloty it traded at 7-week highs. Polish assets have been vulnerable to risk aversion in global markets due to an array of domestic risks. Warsaw's relations with the EU are tense over the rule of law in Poland, the government plans to boost its influence in the bank sector and there is speculation that the central bank may cut rates and that rating agencies may downgrade Poland. The next key date for Polish assets is Sept. 9 when Moody's will review the country's ratings. The zloty shed 0.4 percent to 4.384 versus the euro. In each of the past seven sessions it slid to its weakest levels since around end-July. Warsaw's blue chip equities index regained some ground after weeks of falls, rising by 0.4 percent from Thursday and off a one-month low set in early trade. The stocks of PKO BP, Poland's biggest lender, shed 1.3 percent, extending their losses after its chief executive officer was quoted as saying on Thursday that the bank would prefer to lend rather than pay out a dividend if it faces a choice. "Negative news on dividends tend to weigh heavily on stocks for longer than just one day," a Warsaw-based analyst said. Low-yielding Czech government bonds were mixed after second-quarter economic output figures confirmed that the economy powers ahead. The bonds firmed on Thursday, bucking a weakening of government debt prices across Europe, helped by data showing a record state budget surplus for the first eight months of the year. CEE SNAP AT 1031 MARKETS SHOT CET CURRENCIES Late Prev Dail Chan st ious y ge bid clos chan in e ge 2016 Czech <EURCZK 27.0 27.0 +0. -0.0 crown => 230 245 01% 9% Hungary <EURHUF 310. 309. -0.2 1.35 forint => 4500 8400 0% % Polish <EURPLN 4.38 4.36 -0.3 -2.8 zloty => 40 77 7% 7% Romanian <EURRON 4.45 4.45 -0.0 1.46 leu => 40 32 2% % Croatian <EURHRK 7.48 7.47 -0.0 2.11 kuna => 10 95 2% % Serbian <EURRSD 123. 123. +0. -1.3 dinar => 1600 2400 06% 7% Note: calcula prev clos 1800 daily ted ious e at CET change from STOC KS Late Prev Dail Chan st ious y ge clos chan in e ge 2016 Prague 868. 866. +0. -9.1 60 37 26% 7% Budapest 2810 2804 +0. +17 7.25 5.22 22% .50% Warsaw <.WIG20 1769 1761 +0. -4.8 > .26 .68 43% 4% Buchares 7021 7028 -0.1 +0. t .04 .44 1% 24% Ljubljan <.SBITO 727. 732. -0.6 +4. a P> 72 55 6% 53% Zagreb <.CRBEX 1822 1824 -0.0 +7. > .60 .23 9% 87% Belgrade <.BELEX 629. 627. +0. -2.2 15> 59 48 34% 5% Sofia <.SOFIX 469. 469. -0.0 +1. > 14 49 7% 79% BOND S Yiel Yiel Spre Dail d d ad y (bid chan vs chan ) ge Bund ge in Czech spre Republic ad 2-year <CZ2YT= -0.2 0.03 +03 +3b RR> 53 2 7bps ps 5-year <CZ5YT= -0.1 -0.0 +03 -4bp RR> 15 42 9bps s <CZ10YT 0.28 0.00 +03 +0b 10-year =RR> 5 4bps ps Poland 2-year <PL2YT= 1.67 0.04 +22 +4b RR> 1 9bps ps 5-year <PL5YT= 2.23 0.03 +27 +3b RR> 6 2 4bps ps <PL10YT 2.84 0.02 +29 +2b 10-year =RR> 4 4 0bps ps FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M inte rban k Czech <CZKFRA 0.29 0.26 0.22 0 Rep ><PRIBO R=> Hungary <HUFFRA 0.74 0.71 0.73 0.88 ><BUBOR => Poland <PLNFRA 1.65 1.62 1.6 1.71 ><WIBOR => Note: are for FRA ask quotes prices ***************************************** *********************

09/02/2016 5:21