This week, Poland will release a series of data. The most important factor appears to be the growth in industrial production in August. Separately, the development of producer prices will be published not only in Poland, but also in the Czech Republic and Slovenia. While these releases themselves have limited market impact, they do provide insight into possible trends in headline inflation. Additionally, you will be able to see labor market data. In particular, the unemployment rates in Slovakia and Croatia in August, and the wage growth rates in Poland (August) and Croatia (July). Finally, current account data for Slovakia and Serbia will be published. Croatia will be scrutinized by Fitch Ratings after markets close on Friday. This comes a week after S&P upgraded Croatia’s rating to ‘A-‘ with a positive outlook.
Foreign exchange market trends
Last week, the currencies of Central and Eastern European countries depreciated slightly against the euro. In global markets, the ECB cut deposit rates by another 25 basis points to 3.50%. ECB economists’ new forecasts showed no change in inflation expectations compared to June. The local National Bank of Serbia has decided to continue its rate cutting cycle, lowering its main interest rate by 25 basis points to 5.75%. There are no major releases scheduled in the country this week that could move the foreign exchange market. In core markets, the FOMC is expected to ease monetary policy on September 18th.
Regarding the outlook for regional currencies, we have revised the outlook for the Hungarian forint. Recent speculation about the reintroduction of the high-pressure economy concept, along with new central bank leadership from March 2025, is likely to capture market attention in the coming months. We predict that the forint will gradually depreciate and that the eurohuf could exceed 400 next year.
Bond market trends
Government bond yields in major markets continued to fall as major central banks demonstrated their commitment to monetary easing. Last week, the ECB decided to cut interest rates by 25 basis points, and the Fed will follow suit this week. CEE bond yields also fell slightly last week. The most significant declines are seen in the mid-section of POLGB and the front end of the ROMGB yield curve (-20bp vs.). In Hungary, FRA 1×4 and 6×9 fell by 50 basis points due to the concerted movement, the forint weakened early last week, inflation surprised downwards, and news broke that the current finance minister could be named as the next president. Ta. This was reported by the Hungarian Central Bank in local media. Interestingly, long-term HGB yields have increased slightly. This week, Slovakia will restart SLOVGB 2026, 2028, 2033 and 2035, while Romania will restart ROMGB 2029 and 2035. The Czech Republic, Hungary and Poland offer various bonds, in addition to which the Czech Republic, Croatia and Hungary offer T-bills.
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