WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: US and German government bonds remained under pressure in European trade on Tuesday on the back of last week’s higher than expected US August inflation data, the absence of renewed tensions in the Korean peninsula and the BoE’s clear hawkish shift at last week’s monetary policy meeting. In the EMU sovereign space, Portugal continued to outperform after S&P became the first major rating agency late last week to raise the country’s sovereign credit rating into investment grade territory. In FX markets, the JPY remained under pressure across the board weighed down by political uncertainty after local press reports suggested that Japan’s PM Shinzo Abe is likely to call a snap general election as early as next month. Looking at today’s calendar, US President Donald Trump will address the UN while BoE’s Donald Kohn will speak in Basel. On the data front, only second-tier data are due for release including US housing starts & permits for August.
GREECE: With regard to Greece’s Economic Adjustment Programme, the Vice-President of the European Commission Valdis Dombrovskis stated in an interview that preparations for the 3rd review are underway and that a large part of the c. 95 prior actions attached to this review has already been legislated and must now be implemented. He added that it is significant that the 2018 State Budget secure the 3.5% of GDP primary surplus target and argued that the details of the post-programme period are to be determined at a later stage. According to the Bank of Greece, in August 2017 dependence from the Eurosystem continued to decrease with total Eurosystem funding dropping to €45.3bn down from €50.4bn in July 2017 and €78.5bn in August 2016.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging market assets were little changed earlier on Tuesday as caution prevailed ahead of the conclusion of the 2-day FOMC meeting later tomorrow.
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