WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: US nonfarm payrolls increased by a stronger-than-expected 227k in January, with private payrolls expanding 237k and public sector payrolls declining 10k on the month. Taking the positive lead from Wall Street on Friday’s session amid strong employment growth and positive earnings’ report, most Asian shares closed in the black on Monday. In the rates markets, the 10yr Treasury yield rose to 2.50% shortly after the disappointing average hourly earnings growth, but pared most gains to hover around 2.45% in early European trade on hawkish comments by Fed officials. In FX markets, the softer-than-expected rise in US earning and uncertainty over the potential impact of Trump’s financial deregulation weighed on the US dollar, with the DXY dollar index trading around levels of 99.94 at the time of writing, down from a multi-session peak of 100.26 hit on Friday. The data calendar is rather thin this week, with US weekly jobless claims (on Thursday) and February University of Michigan Consumer Sentiment (on Friday) taking the centre stage. Last but not least, investors’ focus will be on Mario Draghi’s speech in Dutch parliament on Wednesday.
GREECE: The IMF’s Executive Board is expected to convene today to discuss the Fund’s sustainability analysis on Greece’s public debt (DSA) as well as an economic review on the country. Following this meeting, the IMF’s position regarding its role in Greece’s 3rd bailout programme may become clearer setting the stage for the further negotiations between Greece and the institutions. According to press reports, the DSA concludes that Greece’s public debt is “extremely unsustainable” and thus the Fund cannot participate in its 3rd bailout programme unless two conditions are met, namely stricter fiscal measures and reforms on behalf of Greece and more generous debt relief on behalf of its official lenders.
SOUTH EASTERN EUROPE
BULGARIA: Negative sentiment spread over the equity market last week as the published financial data for Q4 2016 was mixed. Meanwhile, sovereign bond markets remained quiet with yields shifting by around 3-6 bps on average.
SERBIA: Stronger than usual demand from oil importers still represents the main driver of Serbian FX spot market over the last few days. The EUR/RSD reached an all-time high at 124.05/25 at some point last week, triggering renewed Central Bank (NBS) intervention in the FX markets.
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