WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Asian equity markets traded mixed on Wednesday, following the IMF’s downwardly revised global economic outlook. In Europe, the majority of equity indices edged higher in early trade on positive corporate earnings announcements. In FX markets, despite yesterday’s upside surprise in UK inflation sterling depreciated across the board on Tuesday amid lingering expectations for further BoE policy easing at theAugust 4th meeting. Elsewhere, the DXY dollar index hit a 4-month high of 97.323 in Asian trade on Wednesday, following a recent string of positive data which have prompted an upward revision in short-term Fed rate hike expectations. Focus today centres on the July update of the BoE Agents’ Summary of Business Conditions. On the macro data front, the Euro area consumer confidence is expected to deteriorate in July amid lingering Brexit jitters.
GREECE: The Greek Minister of Labour Mr. George Katrougalos and the social partners representing workers and employers agreed on key issues in view of the upcoming 2nd programme review, where labour market reform is expected to prevail in the agenda. According to the preliminary Budget Execution data for January-June 2016 published yesterday by the Greek Ministry of Finance, the fiscal balance recorded a deficit of €1.00 bn significantly improved compared to the respective 2016 Budget target (fiscal deficit of €4.49 bn).
SOUTH EASTERN EUROPE
CYPRUS: Cyprus tapped international financial markets for the first time since its exit from its economic adjustment program in late March. The Ministry of Finance raised €1bn selling 7Y bonds with a 3.75% coupon at a 3.8% yield.
CESEE MARKETS: Emerging market assets remained under pressure earlier on Wednesday, in view of the US dollar’s renewed strengthening and mounting worries over the domestic political turmoil in Turkey. Turkish assets underperformed peers, weighed down by concerns over a potential escalation of domestic political tensions after news over a widening purge following a failed coup attempt late last week. In other news, Serbia sold at an auction on Tuesday RSD 28.3bn of 7-year RSD-denominated bonds. The average accepted yield came in at 5.98%, well below 10.75% achieved at a prior auction of similar maturity paper in March 2015.
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