WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: The USD was firmer in European trade on Friday and UST yields moved higher on the back of increased US tax reform optimism. With a 51-49 majority, the Senate approved late on Thursday a budget blueprint for the 2018 fiscal year envisioning a $1.5trn in additional federal deficit over the next decade to accommodate proposed US tax cuts. After gaining Senate approval, the House and Senate should reach a consensus on a common version of the budget resolution before it can be sent to the US President for signing. Once a common resolution has been agreed, discussions on a detailed legislation for the reform of the tax code will follow expecting an agreement between the Senate and the House on tax reform legislation by late 2007/early 2018. Moody’s will review its rating on Spain’s and Italy’s sovereign debt later today. In the US, focus will be on a speech by Fed Chair Janet Yellen on “Monetary Policy since the Financial Crisis” while on the data front, US existing home sales for September lure market attention.
GREECE: Meetings between the heads of the institutions (EC/ECB/ESM/IMF) and the Greek government in the context of the 3rd programme review are scheduled to commence today. Besides the progress in the reforms, the privatisations programme and the fiscal performance, other issues on the agenda are the social dividend that the Greek government reportedly intends to distribute in the event of fiscal over-performance and the deal for the upgrade of F-16 fighter planes for EUR2.4billion. Meanwhile, ahead of the Euroworking Group meeting on 26 October, the Greek government will reportedly submit to the ESM today data on state arrears clearance in order to secure the disbursement of the pending EUR800 million sub-tranche from the 2nd review that expires on31 October.
SOUTH EASTERN EUROPE
BULGARIA: Bulgaria’s stock market ended lower last week, while local-currency bonds closed little changed. On the flipside, Eurobonds firmed across the board.
SERBIA: The EUR/RSD tested the key support level of 119.00 last week, but emerged buying interest on Thursday afternoon pushed the pair higher into the current 3 month range (119.00 – 119.85).
Viewers can log herebelow and read the full report: