WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: US President Donald Trump signed an executive order on Friday aiming to curb immigration from seven Muslim-majority countries, reinforcing market worries over the impact of the new administration’s protectionism stance on trade and the domestic economy. Against this background, major European equity markets opened lower and Wall Street stock futures point to a lower open while the USD remained under pressure. Looking at this week’s calendar, some of the major data releases/events include euro area inflation data and the BoJ’s policy meeting (Tuesday), the FOMC meeting (Wednesday), the BoE policy meeting (Thursday) and the US non-farm payrolls report for January (Friday).
GREECE: The main results of the 26 January Eurogroup were the non-negotiable participation of the IMF in Greece’s 3rd bailout programme and the obligation of Greece to legislate upfront a package of measures to address the potential deviation from the target of a primary surplus of 3.5% in the medium term beyond 2018. It is expected that the Greek government will communicate its intentions for the steps ahead after February 6 when the IMF’s Board of Directors is scheduled to discuss the Fund’s sustainability analysis on Greece’s public debt (DSA) and a review on the Greek economy, as it is believed that at this meeting the IMF will clarify its stance regarding the role it will assume in Greece’s programme. In the following days the Greek government is planning to submit to parliament the bill for the out-of-court workout, a key prior action for the ongoing 2nd programme review. According to the Bank of Greece, in December 2016, total credit decreased by 6.08%yoy (against -2.72%yoy in December 2015).
SOUTH EASTERN EUROPE
BULGARIA: The local equity market broadly firmed last week, with the main SOFIX index recording its sixth consecutive weekly increase. In other news, the Ministry of Finance successfully placed a new 10.5-year bond paper on Monday at an average accepted yield of 1.76% and nominal value of BGN 50mn. Meanwhile, the sovereign local currency yield curve adjusted to the downside.
ROMANIA: The EUR/RON held last week onto this year’s trading range of 4.4920/4.5090. Separately, near term RON rates remained near recent lows on ample market liquidity, while RON government bonds continued to bear steepen.
SERBIA: Despite downside pressures on the dinar, the EUR/RSD traded within a tight range of 123.80 – 124.05 last week following Central Bank (NBS) intervention in the FX markets.
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