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Daily Overview of Global Markets & the SEE Region (Friday, November 9, 2018)

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GLOBAL MARKETS: The Fed maintained the target range for the federal funds rate at 2.00% to 2.25% at yesterday’s monetary policy meeting, as was widely expected, and reiterated that “further gradual increases” will be consistent with its policy objectives. In FX markets, supported by expectations for higher Fed interest rates ahead, the USD was firmer across the board. Elsewhere, US Treasury yields were lower today amid concerns over a more pronounced than currently expected slowdown in China. Most euro area debt yields were also lower partially driven by updated economic forecasts from the EU Commission. In its Autumn 2018 Economic Forecast, the European Commission revised lower its euro area GDP growth projection for both 2018 and 2019 to 2.1% and 1.9% respectively from 2.3% and 2.0% previously, noting that this baseline scenario is subject to “a growing number of interconnected downside risks”.

GREECE: According to the European Commission’s 2018 Autumn Forecast, Greece’s real GDP growth rate for 2018, 2019 and 2020 is expected at 2.0% under the assumption of a no-policy regime change for 2019 and 2020, i.e. under the assumption that the pension cuts and fiscal measures agreed for 2019 and 2020 in the context of the Third Economic Adjustment Programme will be implemented.


CESEE MARKET AND MACRO DEVELOPMENTS: Emerging market assets traded mixed in morning trade on Friday in the wake of the anticipated Fed’s announcement for stable interest rates and the European Commission’s latest economic forecasts according to which euro area GDP growth rate forecasts for both 2018 and 2019 were revised lower. In other news, the National Bank of Serbia (NBS) kept the key policy rate (KPR) unchanged at 3%, a broadly anticipated decision.

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