Regardless of big volatility on Polish markets, Hungarian markets appears to be fairly protected within the present international sell-off setting (though there was a lower on the inventory trade within the final 5 days). The overseas holding of Hungarian authorities bonds remained round HUF3900bn in January, whereas there was an enormous fall since April until December (from round HUF5000bn). Parallel with this stagnation of overseas holding, the bond yields have been additionally fairly secure (Three-year at 1.eight%, 5-year at 2.45% and 10-year at Three.25) and we noticed moderately strain in the direction of the moderation of the yields. Which is sort of unusual from the attitude that Polish one have been pushed upside. So now the Polish and the Hungarian yield curve is nearly the identical (solely Polish one is 10-20bp decrease than the Hungarian one). The EUR/HUF remained within the vary of 313 and 318, which is the buying and selling band within the final 6 weeks, so it was undoubtedly not hit by the worldwide rising currencies sell-off, furthermore, HUF had one of the best spot efficiency towards EUR within the final 5 days. The NBH’s program (abolishment of 2-week depo instrument, growing of required LCR ratio and IRS tenders) is certainly one of many causes the Hungarian market as capable of stay so secure. The home demand will stay robust within the subsequent Four- months maintaining the bond yields at low degree. So, we expect that the NBH is glad now with the present state of affairs and the Financial Council gained’t change the bottom price within the close to future. We anticipate that the bottom price could also be stored unchanged on Tuesday (Jan 26th) and the assertion could be simply barely dovish, placing extra emphasize on the cautious financial coverage within the current unsure international surroundings. However the NBH may additionally emphasize that the low oil worth might push inflation down, so they may monitor intently the longer term improvement. We anticipate that in case EUR/HUF strikes under 305 completely in 2Q16, the NBH might minimize the bottom fee in Might or June, different case we don’t anticipate price change for 2016.Currencies % chng EUR/CZK 27.01 Zero.Zero EUR/HUF 314.Four -Zero.1 EUR/PLN Four.49 1.Zero EUR/USD 1.09 -Zero.1 EUR/CHF 1.09 Zero.Zero FRA 3×6 % bps chng CZK Zero.27 Zero HUF 1.34 -1 PLN 1.57 Three EUR -Zero.21 -2 GB % bps chng Czech Rep. 10Y Zero.68 -Four Hungary 10Y Three.37 -6 Poland 10Y Three.17 Four Slovakia 10Y Zero.81 -5 CDS 5Y % bps chng Czech Rep. 48 -1 Hungary 167 1 Poland 105 Zero Slovakia 48 -1
Hungarian FX and bond markets shrug-off international sell-off
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