WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: At its monetary policy meeting yesterday, the BoE’s MPC voted to keep the official bank rate unchanged at 0.50% confounding expectations for a 25bps cut as it opted not to rush into “a knee-jerk reaction” to the Brexit vote and awaits, instead, official data to confirm that domestic economic activity has slowed in the aftermath of the referendum. In response to the BoE’s unexpected decision, the GBP gained some ground and major government bond yields moved higher. Looking at today’s calendar, focus will be squarely on a string of US data including CPI, retail sales, industrial production and University of Michigan consumer sentiment all for the month of June.
GREECE: According to the local press, the Medium Term Fiscal Strategy (MTFS) 2017-2020 that the Greek government is expected to submit to Parliament within the next couple of weeks will outline a primary surplus target of 2.5%-of-GDP and 2.0-%-of-GDP respectively for 2019 and 2020 compared to 3.5%-of-GDP envisioned in the existing MoU. The Board of the Hellenic Asset Development Fund approved the binding offer submitted by Italian Ferrovie Dello Stato Italiane S.p.A for the acquisition of the 100% share stake in the Greek railway service operator TRAINOSE for €45million.
SOUTH EASTERN EUROPE
ROMANIA: The swelling of the current account deficit has become more visible in the Balance of Payments data released yesterday for the first five months of the year. The current account deficit jumped to €2.6bn in January-May 2016 compared to a surplus of €42mn in the same period a year ago. As a percentage of GDP, the shortfall widened to 1.6% in over the first five months of the year up from an almost balanced position over the same period in 2015.
CESEE MARKETS: Emerging Market assets broadly retained a firm tone earlier on Friday, on optimism that Central Banks around the globe will act if needed to stem a potential spillover impact from the Brexit vote, while positive macroeconomic data from China also favored sentiment towards risky assets. In other news, the Romanian finance ministry sold at an auction on Thursday RON 215mn of 2022 T-bonds, RON 15mn above the amount initially planned, at an average accepted yield came in at 2.70%
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