WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Most Asian bourses edged lower on Monday following a global selloff amid investors’ concerns about falling commodity prices and market caution ahead of this week’s FOMC meeting. Elsewhere, major European equity indices were trading higher at the time of writing, helped by encouraging macro data over the weekend in China that showed signs of stabilization in the economy. In FX markets, the US dollar strengthened against its major currency peers, with investors awaiting the Fed to raise its fed funds rate by 25bps for the first time since 2006 on Wednesday. On the US data front, CPI, industrial production, housing starts, building permits for November due this week take centre stage, while regional manufacturing indices for December are also expected to lure market attention. In the euro area, the final estimate for November HICP and the preliminary estimate for December Markit PMI indices will probably be closely scrutinized by market participants.
GREECE: The Greek government reached an agreement with official creditors on Friday, December 11th, on the implementation of the 13 actions-milestones, paving the way for the disbursement of the €1bn sub-tranche by Friday, December 18th. Provided that the multi-bill is voted by the Greek Parliament and that the remaining open actions will be addressed too, the Euro Working Group is expected to convene on Wednesday, December 16th to assess progress.
SOUTH EASTERN EUROPE
BULGARIA: The local equity market remained in a consolidation mode last week, while volumes remained thin. Elsewhere, the external sovereign debt yield curve undertook some steepening in paper of short-term maturity, while that of longer closed largely unchanged on a weekly basis.
ROMANIA: RON markets were hit last week by the global risk-off sentiment initiated by the December ECB meeting monetary easing decision that fell short of market expectations and exacerbated by the recent decline in global commodity prices and equity markets. In FX markets, the leu extended its recent losses, while in the local rates markets, short term RON rates remained close to recent lows on the back of ample RON liquidity in the money market. T-bond yields moved higher in view of deteriorating risk sentiment over the last few sessions.
SERBIA: In FX markets, the Serbian dinar continued to depreciate against major currency peers last week.
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