KBC Market Research Desk
KBC Bank
Headlines
While the closure of the US market and Sunday’s Greek referendum should keep investors sidelined even in Central Europe there have been fresh macro data from the region. In the case of the Czech Republic they show that foreign trade surplus continued to expand even in May. As concerns the Hungarian retail sales figure (showing 5.2% Y/Y growth adjusted by working days) – it confirmed our view that the sector stabilized around 5% Y/Y increasing level, so the domestic consumption remains an important part of this year’s economic growth of Hungary. Mainly the non-food retail sales is accelerating (up from 5.6% Y/Y in March to 9.7% Y/Y in May), while food retail sales growth almost remained unchanged at 1.1% Y/Y, while fuel consumption is slowing from 9.3% Y/Y in April to 5.6% Y/Y in May.
The figures above caused no market reaction as especially EUR/HUF and HUF bond market is driven mainly by the Greece story. It is interesting that the two markets reacted differently on Greek news. While we see weakening of the HUF there is no sell-off on the bond market rather it had a side move in the last days. Looking ahead we don’t expect any substantial sell-off in the bond market. The reason is the strong demand coming from the local market (mainly banks) and the slightly decreasing issuance by Debt Management Agency. On the EUR/HUF market we see important resistance level between 315.3 and 316, which was able to stop the weakening this week several times. If it breaks that level, the next important resistance level is around 318. We think that a ‘NO’ vote on the weekend in Greece might be rather positive on HUF assets, so yield may rather drop by 20-30bp, while EUR/HUF may fell back to around 310, while a ‘NO’ result might rather indicate side moving bond yields and slightly weakening HUF.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
Recommended Content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.