WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The GBP rebounded in European trade on Wednesday following the release of a report in international newswires conveying that UK Prime Minister Teresa May accepted that Parliament should be allowed to vote on the government’s Brexit plan before Article 50 of the Lisbon Treaty is triggered. With the exception of the GBP, the USD retained a firm tone against most of its major currency peers supported by increased expectations for a 25bps rate hike by the Fed before the end of this year. Growing expectations for a December Fed rate hike and increased inflation expectations kept US Treasury yields on an upward trend. Looking at today’s calendar, focus is on the minutes from the Fed’s September monetary policy meeting.
GREECE: According to press reports the Greek government aims at completing the 2nd programme review – expected to commence on October 17th – by the November 7th Eurogroup. Subsequently, it will seek official lenders to further specify the debt relief measures that were agreed in May by December 5th, when the last Eurogroup for 2016 is scheduled to convene. The 2nd review comprises 33 incomplete prior actions, the most challenging of which is the labour market reform where the collective dismissal and industrial action frameworks as well as collective bargaining need to be aligned with best EU practices.
SOUTH EASTERN EUROPE
ROMANIA: Inflation surprised to the downside coming at -0.1% MoM/-0.6% YoY in September vs. +0.1% MoM/-0.2% YoY in August driven lower by the sharp monthly decline of fruit and vegetables prices.
CESEE MARKETS: Emerging Market assets remained under pressure earlier on Wednesday as increased expectations for a Fed rate hike this year continue to undermine their high yield allure. Disappointing US earnings reports also dampened risk sentiment. Regional assets were mixed in morning European trade. A vote on a bill over the conversion of CHF-denominated loans, that was scheduled to be held yesterday, was postponed by Romanian parliament amid lack of quorum.
Viewers can log herebelow and read the full report: Daily Overview October 12 2016