CEE MARKETS-Inflation worries drive Polish and Hungarian bond yields higher

·3 min read

By Anita Komuves BUDAPEST, May 12 (Reuters) - Inflation fears dominated the market mood in central Europe on Wednesday as investors awaited U.S. CPI data later in the day, while government bond yields in Poland and Hungary rose on worries about stronger-than-expected domestic price rises. "Soaring inflation in CEE together with a solid economic recovery are fueling expectations for rate hikes, which are pushing yields further up," Erste Bank wrote. Hungary and the Czech Republic reported higher-than-expected CPI numbers for April on Tuesday, while Romania is due to announce new inflation forecasts on Friday that are likely to show a sharp rise for 2021. Polish inflation jumped to 4.3% in April, above the upper end of the central bank's target range. Long-term Hungarian government bond yields rose about 10 basis points on Tuesday after the inflation data and were stable on Wednesday morning, two traders said. "High CPI was a strong sign that the central bank might not be able to calm every big wave in the market, which prompted investors to sell," one fixed-income trader said. "The market is now waiting for the minutes of the central bank's latest meeting this afternoon before deciding on the next move." The yield on the Hungarian 10-year government bond was 2.85% on Wednesday. The 15-year yield was 3.35% while the 20-year bond's yield was 3.42%. The Hungarian forint edged up but continued to hover around 358 per euro. Polish bond yields also rose on Tuesday due to concerns about inflation and increased expectations of rate hikes, with 5-year government bond yields rising 18 basis points to a 13-month high. The 5-year yield retreated 5 basis points on Wednesday. The zloty was 0.18% firmer and trading at 4.5430 per euro a day after the Supreme Court delayed a decision on how courts should treat cases involving foreign currency loans. [nL1N2MY0JC Poland's central bank is offering to buy bonds worth 10 billion zlotys on Wednesday. The Romanian leu was stable ahead of a rate-setting meeting later in the day where analysts expect no change. Stock markets in the region were mixed after losses in the previous session. Prague gained 0.41% while Budapest slid 0.25% and Warsaw was down 0.63%. CEE SNAPSHO AT MARKETS T 1102 CET CURRENC IES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech % EURHUF= Hungary 0 % EURPLN= Polish % EURRON= Romanian EURHRK= Croatian % EURRSD= Serbian 0 % Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1110.41 1105.930 +0.41% +8.11 0 % .BUX Budapest 44241.6 44350.67 -0.25% +5.07 6 % .WIG20 Warsaw 2097.16 2110.48 -0.63% +5.70 % .BETI Buchares 11704.2 11695.86 +0.07% +19.3 t 1 6% .SBITOP Ljubljan <.SBITOP 1066.08 1061.41 +0.44% +18.3 a > 4% .CRBEX Zagreb 1950.33 1950.84 -0.03% +12.1 3% .BELEX1 Belgrade <.BELEX1 758.31 755.94 +0.31% +1.30 5 5> % .SOFIX Sofia 517.93 515.34 +0.50% +15.7 3% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT=R 2-year s CZ5YT=R 5-year s CZ10YT= s Poland PL2YT=R 2-year s PL5YT=R 5-year s PL10YT= s FORWARD 3x6 6x9 9x12 3M interb ank Czech 0.64 0.97 1.31 0.36 Rep Hungary 0.97 1.14 1.32 0.79 Poland 0.28 0.34 0.46 0.21 Note: are for ask FRA prices quotes ********************************************** **************** (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Kim Coghill)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting