WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Bucking the broadly negative trend in Asian bourses, the majority of European bourses firmed in morning trade on optimism that the newly elected left-wing Greek government will eventually seal a deal with official creditors.
GREECE: Greece’s Minister of Finance Yanis Varoufakis was quoted as saying in an interview to the Financial Times, that the government will no longer call for a write-down on Greece’s nominal debt. Instead, it will request a “menu of debt swaps” including two types of new bonds. The first would be indexed to nominal economic growth and would replace European rescue loans and the second, termed “perpetual bonds”, would replace ECB-owned Greek bonds. On the data front, the headline seasonally adjusted Markit Greece’s PMI Manufacturing Index fell from 49.4 in December to a 15-month low of 48.3 in January while Greece’s Economic Sentiment Indicator dropped for the second month in a row in January coming in at 95.3, the lowest level since April 2014.
SOUTH EASTERN EUROPE
SERBIA: Vindicating our expectations, the EUR/RSD extended its recent downtrend on Monday to close ca 0.6% lower at an intraday low of122.20/40, ahead of the RSD 50bn 7-year government bond auction scheduled for later today.
BULGARIA: Bulgaria’s 2014 general government budget ran a deficit of 3.7% of GDP (BGN 3.04bn), in line with the government’s revised target but more than double a shortfall of 1.8% of GDP recorded a year earlier.
CESEE MARKETS: The majority of emerging stock markets advanced in morning trade on Tuesday, with energy related shares leading the gains thanks to a four-session rebound in oil prices. In FX markets, the Turkish lira outperformed a broad strengthening of CEE currencies earlier today, after January’s CPI came in higher than anticipated.
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