WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: In a speech in Frankfurt on Friday, ECB President Mario Draghi confirmed that the Central Bank will reassess the balance of risks at its upcoming meeting on December 3rd and it will ease its monetary policy further if it is deemed necessary. Reacting to the dovish tone the ECB President adopted, short-dated German government bonds firmed with the 2-yr bond yield hitting a fresh intraday record low earlier today. In FX markets, the EUR came under renewed pressure, marking a new seven-month low against the US dollar.
GREECE: In a statement released on Saturday, November 21st Eurogroup President Jeroen Dijsselbloem said that, on the basis of a final compliance report from the institutions, the Euro Working Group (EWG) agreed that “the Greek authorities have completed the first set of milestones and the financial sector measures that are essential for a successful recapitalization process”. As per the same statement, the EWG agreement paves the way for a formal approval by the ESM Board of Directors at its meeting on Monday, 23 November for disbursing to Greece the €2bn sub-tranche linked to the first set of milestones./ The Greek government submitted to Parliament on Friday, November 20th the final budget law for FY-2016 which is scheduled to come for vote on December 5th.
SOUTH EASTERN EUROPE
BULGARIA: The domestic equity market treaded water last week. Local sovereign and Eurobond curves moved slightly downwards with paper of longer maturity outperforming short-dated securities. The next treasury auction is scheduled on November 23rd for a planned amount of BGN 150mn (3-year notes).
SERBIA: The dovish tone assumed by the National Bank of Serbia during its last monetary policy meeting supported a EUR/RSD up-move last week, with the pair bouncing towards the upper bound of the yearly range at 120.80/00.
CESEE MARKETS: The majority of emerging stock markets kicked off the week on a negative footing on profit taking after last week’s rally which was instigated in the wake of the release of the FOMC October 27/28 meeting minutes indicating that the pace of rate tightening ahead will likely be gradual. A renewed drop in commodities prices also weighed on EM equity. Separately, regional currencies tread water and government bonds were broadly weaker earlier on Monday. Looking into this week, Turkey’s monetary policy meeting (Tuesday) takes centre stage in the CESEE region.
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