BUDAPEST: Long-term yields in some Central European markets tracked a rise in euro zone peers on Friday, while a 3-year bond auction in Serbia was expected to draw strong demand.
Germany’s 10-year bond yield rose to an almost 5-week high as a surge in oil prices increased inflation expectations.
Polish and Hungarian bonds tracked a steepening Bund yield curve.
Poland’s 10-year yield rose 2 basis points (bps) from Thursday’s close to 3.061, and Hungary’s equivalent yield, at 2.49 percent, was 3 bps above Thursday’s fixing.
Hungary’s advance was not linked with either gross wages data which again showed double-digit annual growth or new comments from Prime Minister Viktor Orban highlighting tension with Brussels, market participants said.
The surge in wages is unlikely to boost inflation in the short term and lead to less loose central bank policy, analysts said.
Markets continue to ignore an East-West divide in the European Union over differences in views about immigration and the role of national governments, one Budapest-based fixed income trader said.
“We are yet to see if the jostling turns into a street fight,” the trader said.
Hungarian Prime Minister Viktor Orban said on Friday that EU leaders should not make sweeping decisions on migration before next year’s European Parliament elections.
Hungary’s forint eased 0.1 percent against the euro by 0902 GMT, just like the zloty and the leu , while regional stock markets were mixed.
The region’s currencies are still near the 2-month highs they reached by early this week as investors chose Central European currencies and bonds instead of other emerging markets, which were hit by jitters, like Russia and Turkey.
The dinar firmed slightly to 118.05 ahead of an auction of 3-year Serbian government bonds.
Auctions this year often buoyed the dinar which has also been strengthened by increased demand for lending, FDI inflows and robust exports.
The Serbian central bank repeatedly sold the currency which remains resistant even though the bank last week surprised at its second consecutive rate-setting meeting by reducing its benchmark rate.
“Although market demand at the debt auction is likely to be good, strong RSD may raise more concerns with the regulator (central bank) so a possibility of FX interventions should not be ruled out,” Raiffeisen analyst Gintaras Shlizhyus said in a note.
Source: Brecorder
