WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Asian equity markets traded mixed on Tuesday, with the Japanese Nikkei-225 stock average index ending higher favored by the JPY’s weakness and the BoJ’s purchases of exchange-traded funds during the past three trading days. In Europe, major equity indices were trading higher at the time of writing, supported by encouraging manufacturing surveys that overshadowed a sharp decline in HSBC’s shares. In FX markets, the US dollar moved higher following Federal Reserve Bank of Philadelphia President Patrick Harker’s comments that increased expectations for an interest rate hike in the next FOMC monetary policy meeting in March. Against this background, the EUR/USD was hovering around one-week low of 1.0536 at the time of writing, within distance from a five-week low of 1.0520 recorded a few sessions ago. In the rates markets, relatively hawkish comments by Fed officials pushed Treasury yields higher, while, in Europe, the French 10-yr government spread vs. Germany widened to a five-year- intraday high of 84bps amid heightened political woes in France.
GREECE: Τhe Eurogroup that convened yesterday produced a positive outcome as it decided the return of the review mission to Athens and the resumption of negotiations to conclude a Staff Level Agreement on policy reforms in the context of the 2nd programme review. Although no political agreement has yet been reached, Greece agreed to pre-legislate a package of measures to be implemented in 2019. The measures were not specified but they will pertain to tax and pension reform as well as labour market regulations focusing on growth rather than austerity. According to the Bank of Greece, in December 2016, the current account showed a deficit of €933 million, up by €150 million compared to December 2015.
SOUTH EASTERN EUROPE
CESEE MARKETS: CESEE assets were mostly firmer in early European trade on Tuesday. Elsewhere, Serbian assets continued to trade mixed earlier today following news late last week that Prime Minister Aleksandar Vucic will run for the presidency in the upcoming elections due to be held in spring. In the local debt markets, the Ministry of Finance of the Republic of Bulgaria sold on Monday the planned amount of BGN 60mn (~€30.7mn) in 4-year paper at an average accepted yield of 0.18%.
Viewers can log herebelow and read the full report: Daily Overview February 21 2017