Daily Overview of Global Markets & the SEE Region (Monday, July 10, 2017)

Dr. Platon Chief Market Economist, Deputy General Manager, Eurobank Ergasias S.A.,

HIGHLIGHTS

WORLD ECONOMIC & MARKET DEVELOPMENTS

GLOBAL MARKETS: US non-farm payrolls data for the month of June surprised positively with the headline rising by 222k, higher than 179k expected. The unemployment rate rose to 4.4% from a 16-year low of 4.3% in the prior month but this was largely due to an increase in the participation rate. In reaction to the US employment report, major European equity markets opened higher on Monday, taking their lead from the positive tone on Wall Street in the prior session. US government bond yields remained in an upward trend with the bearish curve steepening prevailing. In FX markets, USD was modestly firmer against the majority of its currency peers, especially vs. JPY. Looking at this week’s calendar, focus is on the FOMC Chair Janet Yellen’s semi-annual testimony before Congress on Wednesday while, in terms of data, Friday’s US inflation and retail sales for June lure market attention.

GREECE: The ESM Board of Directors approved on Friday the third tranche of €8.5 billion of financial assistance to Greece. According to the relevant press release, the first disbursement under this tranche will amount to €7.7 billion, and is expected to be made by the ESM today. A further disbursement for arrears clearance of €0.8 billion may be made after 1 September 2017 subject to Greece making significant progress on arrears clearance and to a further decision by the ESM Board of Directors. according to the Hellenic Statistical Authority, the deficit of the Trade Balance for the 5-month period from January to May 2017 increased by 24.7% compared with the corresponding period in 2016. The corresponding change excluding oil products increased 19.8%, while the corresponding change excluding oil products and ships recorded an increase of 6.3%.

SOUTH EASTERN EUROPE

BULGARIA: The domestic equities market ended mixed last week as trades came in narrow spreads with moderate volumes. Meanwhile, the local sovereign curve was flexed around the mid tenor, with the long-end increasing by up to 6bps. Eurobond yields drifted higher as well, in line with the upward trend witnessed in core government bonds.

SERBIA: Following a short-lived bounce towards 120.70/90 early in the week, the EUR/RSD tumbled to a fresh 1 ½-year low at 120.00/20 on Friday.

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