WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Judging from the market reaction, the ECB’s stimulus package was perceived as less aggressive than expected. The majority of global equity markets were weaker in European trade on Friday, bond yields moved higher and the EUR gained across the board. All eyes today are on the US November’s non-farm payrolls report which is expected to add to market expectations for a Fed rate hike at the upcoming December 15th-16th meeting.
GREECE: Responding to a relevant question in the Q&A session following the conclusion of yesterday’s ECB meeting, Vice President Vítor Constâncio suggested that, under certain conditions, the reintroduction of a Greek collateral waiver could take place before the conclusion of the 1st programme review. As regards the prospect of the ECB starting to purchase Greek sovereign bonds under the QE programme, the ECB Vice President said that this issue “is more complex and it does not depend only on the successful completion of the review”. Speaking at a regularly scheduled news conference in Washington yesterday, IMF spokesman Gerry Rice was quoted saying that the Fund will start considering whether to participate in Greece’s new bailout programme in January, when official discussions between the EC/ECB/IMF/ESM mission heads and the Greek government are scheduled to commence in the context of the 1st programme review.
SOUTH EASTERN EUROPE
ROMANIA: The Ministry of Finance announced the main parameters of the long-waited budget of 2016. In other news, the retail sales reading for October came out almost flat on a monthly basis. Yet retail sales maintained the same impressive speed on an annual basis, expanding at the highest rate in seven years.
CESEE MARKETS: Emerging stock markets extended this week’s losses in early European trade on Friday, after the ECB’s decision for further monetary easing fell short of market expectations. Meanwhile caution prevailed ahead of the US NFPs report for November due for release later on the day, which are much awaited by market participants for any clues on the FOMC’s looming rate tightening path ahead. Along similar lines, CESEE currencies and government bonds were mixed earlier on Friday. With the ECB meeting now out of the way, focus turns to the FOMC meeting on December 15-16 which is likely to set the tone for EM performance through to year-end.
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