WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The USD gave back some of its recent gains and major European equity markets opened lower on Monday amid market anxiety ahead of the November 8th US presidential elections. Elsewhere, major government bonds continued to face selling pressures while oil prices remained in a downward trend amid lingering oversupply woes.
GREECE: The first round of negotiations with official lenders in the context of the 2nd programme review was concluded last Thursday and talks are expected to be resumed in mid-November. A number of issues remain open particularly with regard to the medium term fiscal strategy, the legal framework for out-of-court workout of NPLs and labour market reform. According to the ESM Managing Director Klaus Regling, the ESM is working on the short-term debt relief measures while as regards the medium and long-term debt relief measures, the commitment of the May 2016 Eurogroup to continue supporting Greece as long as the country implements the agreed reforms is strong, markets understand that and therefore, further specification of these measures is not yet necessary.
SOUTH EASTERN EUROPE
BULGARIA: The local equity market recovered ground over the last few days, with the main SOFIX index surging by 3.67% on a weekly basis to a new 2-year high. Meanwhile, local currency and external government bonds were little changed last week as caution prevails ahead of the presidential elections due on Sunday.
ROMANIA: The EUR/RON seems to have stabilized around the 4.5000 psychological level last week, after the prior weeks’ up-move. The money market is seeing some pressure as the excess RON liquidity witnessed for most of the year is slowly drained away. In government debt markets, selling continued for local currency paper of long maturity.
SERBIA: Despite prevailing downside pressures last week, the EUR/RSD remained bound within a range of 123.00-123.30 amid renewed Central Bank interventions in the FX markets.