WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: In view of diverging ECB and Fed monetary policy outlooks, German Bunds continued to outperform US Treasuries with the corresponding 10-yr yield spread undertaking some further widening today. In FX markets, the USD retained a firm tone with the DXY index marking a fresh multi-month peak earlier in the day.
GREECE: In an official statement issued yesterday, Eurogroup President Jeroen Dijsselbloem confirmed that a “substantive agreement has been reached” between Greek authorities and the institutions “on all outstanding issues regarding the measures included in the first set of milestones and on the financial sector measures that are essential for a successful recapitalisation process”. The said statement also read that “upon the completion of the agreed conditionality and the implemented legislation, the Eurogroup/EWG stand ready to support the disbursement of the €2 billion sub-tranche linked to the first set of milestones and the transfer to the HFSF of the funds needed for the recapitalisation of the Greek banking sector, as required, out of the €10 billion earmarked for this purpose”.
SOUTH EASTERN EUROPE
ROMANIA: The new technocrat government was endorsed yesterday by the parliament with an overwhelming majority.
CESEE: Emerging stock markets moved broadly lower in European trade on Wednesday amid increased expectations for a Fed rate hike in December. Market caution prevailed ahead of the FOMC October 27/28 meeting minutes due for release later today. Risk sentiment also remained fragile in the aftermath of the Paris attacks on the weekend and after a bomb scare in Germany yesterday and a deadly raid in the French capital on terrorist suspects earlier on Wednesday. Elsewhere, regional currencies were little changed and government bonds were mixed earlier on Wednesday.
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