WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Core government bond yields remained in an upward trend in European trade on Monday following last week’s hawkish shift from several G10 central banks, including the ECB, the BoE, the BoC and the RBNZ. China’s manufacturing-related data, which supported the view of an improving global growth outlook, also had some impact. In FX markets, USD gained some ground on the back of higher UST bond yields. Looking at this week’s global calendar, the FOMC minutes from the June 14 meeting on Wednesday will be closely watched while ECB minutes from the June 8 meeting on Thursday will also attract market attention especially following the ECB President’s hawkish comments last week. On the data front, focus this week will be on today’s PMI manufacturing data from the US, the euro area and the UK ahead of Friday’s US non-farm payrolls for June. US markets will close early today ahead of Tuesday’s Independence Day holiday.
GREECE: The Bank of Greece released on Friday its Monetary Policy Report 2016-2017 where it revised downwards its GDP growth forecast for 2017 from +2.5% (Monetary Policy Interim Report, December 2016) to +1.6% due to: 1) the long delay in completing the 2nd programme review and the consequent increase in uncertainty, which led to a considerable decline in investment and 2) a sharp increase in the tax burden. The medium – term prospects of the economy remain favourable conditional on the smooth implementation of agreed reforms.
SOUTH EASTERN EUROPE
BULGARIA: Bulgarian equities finished another week in the black on Friday amid positive investor sentiment. Meanwhile, the domestic bond market remained relatively quiet with little adjustment to the upside for yields above the 4-year tenor. On the other hand, Eurobond yields increased by 4- 5 bps on average.
SERBIA: The dinar’s recent rally continued strong last week, with the currency gaining 0.76% against the euro and the EUR/RSD falling from Monday’s open at 121.50 to a 1 ½ year low near 120.55 on the back of strong euro indexed loan disbursements.
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