WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The January 31/February 1 FOMC monetary policy minutes released yesterday supported the view that a gradual Fed rate tightening path is likely to be appropriate failing though to provide any strong signal about the timing of the next rate hike. US long-dated Treasuries gained with the 2/10-yr US yield curve undertaking some further bullish. French sovereign bonds firmed on news that Francois Bayrou of France’s Centre Party will not run for President and that he will, instead, support candidate Emmanuel Macron. In FX markets, the USD gained some ground supported by US Treasury Secretary Steven Mnuchin’s comments that the strong dollar is “a good thing” in the long-run.
GREECE: Following a meeting with the German Chancellor Angela Merkel yesterday in Berlin, IMF Managing Director Christine Lagarde stated that the IMF was “much more confident after the progress made by the Greek authorities” but that reforms were urgently needed in the country’s pension and income tax systems, as well as in other areas. Furthermore, she argued that more clarity on the medium-term debt relief measures is expected once the review has been closed, noting that “What will be needed is not a haircut if the reforms are done, but a significant extension of maturity, a significant interest rate capping, and that will have to be discussed in greater detail later on as progress is made on the reform front”.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging stock markets broadly firmed in early European trade on Thursday, extending their recent gains, after the Fed meeting minutes. In the CESEE region, assets trod water in morning trade.
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