Daily Overview of Global Markets & the SEE Region (Thursday, 30 May, 2019)
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Market participants retained a cautious stance against risk assets in early European trade on Thursday, amid worries that the renewed escalation in the US/China trade war could last longer. Favored by their safe-haven appeal, UST and German Bunds remained well supported. Turning to the EMU periphery, the majority of sovereign bonds outperformed core paper on a daily basis. Meanwhile, both Spain and Portugal continued to outperform Italy, favored by the market friendly outcome in European parliament elections in both countries, where pro-EU centre left posted a strong win. In FX markets, the USD retained a firm tone against its major currency peers, favored by increased US/China trade tensions. Looking at today’s calendar, focus is on the second estimate of US Q1 GDP which is expected to show to a somewhat lower pace of growth compared to an annualized rate of 3.2%QoQ initially reported.
GREECE: According to the latest report by the Hellenic Parliamentary Budget Office, the recent expansionary measures of 2019 will have an overall impact of 0.55% of GDP (according to the General Accounting Office) and will be covered by the projected fiscal space, which according to the government’s Stability Programme would be around 0.6% of GDP in 2019, i.e. without the adoption of the aforementioned expansionary measures. According to press reports, the institutions will publish the 3rd Enhanced Post Programme Surveillance (EPPS) reports for Greece on June 5th as scheduled, in spite of the upcoming general elections. Along with the review of the progress in reforms and privatisations, the report will also incorporate the assessment of the fiscal impact of the recent expansionary measures.
SOUTH EASTERN EUROPE
CYPRUS: Total deposits increased by €236.9mn in April bringing the annual rate of expansion down to 0.6% on negative base effects from last year’s government liquidity injection to the banking system.
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