WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The EUR remained under pressure in European trade on Friday and German government bonds retained a firm tone amid heightened expectations for further ECB monetary policy stimulus at the next policy meeting on December 3rd.
GREECE: In a meeting yesterday, the Euro Working Group (EWG) reportedly approved the prior actions that will be attached to the release of the pending €1bn ESM loan installment to Greece. As per the same sources, these milestones amount to 13 and include, among others, a comprehensive strategy for the resolution of domestic banks’ non-performing loans (NPLs), privatization of ADMIE (or an alternative equivalent plan) and a fiscally-neutral reform of the unified wage. The EWG reportedly decided that the relevant legislation required for the implementation of the agreed milestones will have to be approved by the Hellenic Parliament by December 11th so as the €1bn installment to be released by December 18th.
SOUTH EASTERN EUROPE
BULGARIA: The Central Bank of Bulgaria amended the minimum reserve requirements decree yesterday. According to the press-release, BNB introduced the concept of “excess reserves” with the Central Bank and made it possible for the application of negative interest rates on excessive reserves when ECB’s deposit facility rate is negative. In addition, BNB will no longer recognize as reserve assets banks’ funds kept in accounts of Target2-BNB national system component.
CESEE MARKETS: The majority of emerging stock markets ended modestly higher on Thursday, with US markets closed for the Thanksgiving holiday, and a timid recovery in commodity prices so far this week favouring related equity. In FX markets, CESEE currencies remained under pressure amid increased expectations for a Fed rate hike in December, while sentiment also remained fragile in view of the recent flare up of geopolitical tensions in the region. In the local rates markets, government bonds ended mixed on Thursday. Looking into next week, key global data and events take centre stage and are likely to set the tone for CESEE assets direction, as they unfold in the coming days.
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