Daily Overview of Global Markets & the SEE Region (Tuesday, 16 July, 2019)
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: European government bonds retained yesterday’s improved tone in early trade, recovering part of last week’s losses, as investors seem to be back on the hunt for yield. The majority of EMU sovereign bonds outperformed Bunds, with the Italian market posting the best performance. Turning to the FX market, GBP/USD dropped below 1.2500 to levels around 1.2465/70 at the time of writing, not far from the recent six-month low of 1.2438 (9 July) amid concerns about the prospect of Eurosceptic Boris Johnson winning the Conservative party leadership contest and becoming the next PM. Elsewhere, EUR/USD was a tad lower on the day hovering close to the lower boundary of the 1.1200-1.1300 recent trading range ahead of the vote in the European Parliament on whether to confirm German Defense Minister Ursula von der Leyen as the new President of the European Commission. Both Fed Chair Jerome Powell and BoE Governor Mark Carney are scheduled to speak today, while on the data front, major releases include retail sales and industrial production data in the US ahead of Germany’s ZEW survey for July.
GREECE: The ESM Managing Director Klaus Regling met yesterday with the Finance Minister Christos Staikouras and reportedly stated that there is leeway for the Greek government to choose the fiscal policy mix as long as fiscal targets are met. An offer book for a new 7-year GGB opened today with an aim of raising c. €2.5bn at a yield of less than 2%.
SOUTH EASTERN EUROPE
TURKEY: Fitch downgraded the long term sovereign rating of Turkey from BB to BB- with negative outlook.
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