Dr. Platon Monokroussos, Chief Market Economist, Deputy General Manager, Eurobank Ergasias S.A
HIGHLIGHTS
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: In FX markets, the USD moved lower for the second consecutive trading day. Although the FOMC dropped the “patient” guidance from its post-meeting policy statement, comments by Chairman Janet Yellen at the ensuing press conference suggested that the Central Bank will not rush to embark on a rate tightening cycle. However, with the monetary policy divergence remaining a key theme in FX markets, any further USD depreciation in the coming sessions will likely be limited.
GREECE: Greece’s Prime Minister Alexis Tsipras is scheduled to meet German Chancellor Angela Merkel today in Berlin with a joint press conference to follow at 19:00CET. According to reports, the main issues of discussion will include, among other, bilateral relations and a draft of a fully costed list of reforms the Greek government is reportedly expected to submit in the days ahead to the Institutions with a view to have it swiftly approved by euro area finance ministers.
CYPRUS: According to first GDP estimates for 2014 released on Friday, the full-year output contraction was contained at 2.3% from 5.4% in 2013. The reading came out much lower than envisaged in both the initial and the revised programme forecasts (-3.9% in the initial programme drafted back in May 2013 and -4.8% in the latest review in February 2014 respectively).
SOUTH EASTERN EUROPE
ROMANIA: Continuous government bond selling ahead of the FOMC, particularly in maturities above 5-years, pushed the long end of the curve around 10bps higher on a weekly basis, while paper of lower maturity proved more resilient.
SERBIA: The EUR/RSD closed modestly higher on a weekly basis at 120.00/20 as the pair’s downside – amid strong interest towards RSD denominated T-bills and T-bonds – was capped by renewed Central Bank interventions in the FX markets.
CESEE MARKETS: Most emerging market assets staged a relief rally last week, in response to a more dovish that expected FOMC tone which suggested that the Fed may be less aggressive in its upcoming rate-tightening cycle, anticipated to incept later this year.
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