WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: In the absence of key data releases and events, major European bourses were weaker in early trade on Wednesday, taking their lead from the negative tone in Wall Street overnight amid disappointing corporate earnings results. Weaker oil prices may also had an impact. The AUD was among the main outperformers in the G10 FX space supported by reduced expectations for lower interest rates at next week’s RBA policy meeting. On the data calendar, today’s notable releases include US initial jobless claims as well as durable goods orders and new home sales both for September. The Fed speakers calendar is quiet as we enter the one week period ahead of the November 1-2 FOMC meeting.
GREECE: As expected, the ESM’s Board of Directors authorized yesterday the disbursement of the €2.8bn pending sub-tranche related to the 1st programme review. The said sub-tranche consists of two parts: €1.1bn to be used for debt servicing needs following the completion by the Greek side of 15 attached prior actions and the remaining €1.7bn for arrears clearance after the Greek side succeeded in meeting the target of net arrears clearance for the period between June and September. In other news, official discussions in the context of the 2nd review between the Greek officials and the heads of the ECB/EC/IMF/ESM mission will continue today with labor market reforms reportedly standing as one of the main sticking issues. Reportedly, the mission heads will depart from Athens on Friday and will return in mid-November with an intention to have the review completed ahead of the December 5th Eurogroup.
SOUTH EASTERN EUROPE
CESEE MARKETS: Most emerging market assets remained under pressure earlier on Wednesday as increased expectations for a Fed rate hike this year continue to dent their high-yield allure. In FX markets, the Hungarian forint remained under pressure after the Central Bank announced yesterday its decision to ease monetary conditions further. In the local debt markets, the Serbian finance ministry sold on Tuesday RSD 23.4bn (~€190mn) of 7-year T-Bonds at an average accepted yield of 5.64%.
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