Daily Overview of Global Markets & the SEE Region (Wednesday, 19 June, 2019)
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Speaking at the ECB’s annual Forum on Central Banking in Sintra yesterday, President Mario Draghi adopted a more dovish stance compared to that at the 6 June post-ECB meeting press conference, stating clearly that the Central Bank is open to another round of monetary policy stimulus if the outlook does not improve. In reaction to the above, fixed income markets gained sharply with the 10-yr Bund yield hitting a fresh intraday record low of -0.33% yesterday, before rising modestly to levels around -0.31% in early European trade today on news that US President Donald Trump and his Chinese counterpart Xi Jinping will meet on the sidelines of the G20 meeting. In FX markets, the EUR/USD retreated to levels slightly below 1.1200 after hitting a peak close to 1.1250 earlier this week, but still within the 1.1100-1.1350 recent range in spite of the ECB President’s dovish tone and a string of poor Eurozone data releases in recent weeks. Focus today is on the policy outcome of this week’s two-day FOMC policy meeting and the third round of voting for the UK Conservative party leadership.
GREECE: In its Overview of the Greek Financial System, June 2019, the Bank of Greece (BoG) forecasts 2019 GDP growth around the same levels as in 2018, i.e. 1.9%YoY, with domestic downside risks stemming from high taxation, the increase of the statutory minimum wage, delays in structural reforms and privatisations. As regards the financial system, the report highlights the fact that since March 2019, Greek systemic banks no longer resort to the Emergency Liquidity Assistance (ELA) while efforts towards NPLs reduction are bearing fruit and financial institutions’ liquidity conditions are improving through the expansion of funding sources.
SOUTH EASTERN EUROPE
CYPRUS: Tourist arrivals declined by -3.5% YoY in May, bringing the rate of contraction down to -1.1% YoY in the first five months of the year.
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