WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: GBP remained under pressure in European trade on Thursday amid market concerns that UK PM Theresa May’s Conservative party may reduce its 17-seat working majority in the 650-seat British parliament at the upcoming June 8th snap election and will likely fall short of the 326 seats needed to form a single party government tasked with the complicated Brexit talks due to start in mid-June. Elsewhere, the EUR/USD retained a firm tone for the second consecutive session favored by weaker-than-expected US housing related data which added to the view that the Fed may not rush to deliver an additional rate hike soon after the June monetary policy meeting, where the likelihood of a 25bps increase is currently priced-in with a probably of around 90%. In reaction to euro area inflation data which supported the view that no significant changes to the ECB’s forward guidance should be expected at next week’s monetary policy meeting, the 10-yr Bund yield dropped to a two-month intraday low on Wednesday before edging up in the following day on supply jitters.
GREECE: Speaking at a conference yesterday, ECB Executive Board Member Benoit Coeure said that if at the June 15th Eurogroup the debt relief measures for Greece were sufficiently clarified, this would allow the ECB to consider including Greek bonds in its QE programme. Speaking at the General Assembly of the Hellenic Federation of Enterprises (SEV) in Athens yesterday, Greek PM Alexis Tsipras reiterated his position that Greece will accept a solution that guarantees the country’s return to the financial markets in a sustainable manner. The 20-year extension (2026 – 2046) of the concession of the airport of Spata to the Athens International Airport S.A. (AIA S.A.) was sealed yesterday with the Hellenic Republic Asset Development Fund (HRADF) accepting the improved offer of €600 billion made by the concessionaire. According to the Hellenic Statistical Authority (ESLTAT), the overall volume index in retail trade in March 2017 recorded a decrease of 1.0%YoY.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging market assets gained ground earlier on Thursday following upbeat PMI data in emerging Europe. Meanwhile, most currencies in the CESEE space were weaker as the USD regained some composure, while government bonds mostly retreated in early European trade on Thursday.
Viewers can log herebelow and read the full report: Daily Overview June 1 2017