KBC Market Research Desk
KBC Bank
Headlines
The zloty shrugs-off poor business sentiment data
The Czech state budget performs strongly this year, which is good news for Czech government bonds
Although yesterday’s release of the regional PMI indices showed that business sentiment worsened significantly in the Polish industry, the zloty weakness proved to be only short-lived. The Polish currency could benefit from lower USD interest rates, which brought some further relief to emerging markets.
Meanwhile yesterday, the Czech government failed to reach agreement n a budget framework for next year and for later years and postponed the decision. Interestingly, the budget performance for the current year is hugely positive as the budget balance for the first four months in a year has reached the biggest cumulative surplus since 1993. Recall that the better budget performance has been driven mainly by stronger revenues implied by solid economic growth and good VAT revenues. The positive budget performance is then definitely good news for Czech government bonds, because the planned public budget deficit for this year is targeted at CZK 70bn and such deficit will be very hard reach unless something very nasty happens with the Czech economy. We think that the public budget deficit will be just CZK 50bn or lower, which implies lower bond supply going forward.
Today, regional markets might monitor a Spring Economic Forecasts from the European Commission, but we do not expect much reaction to these figures.
| Currencies | % chng | |
| EUR/CZK | 27.02 | -0.1 |
| EUR/HUF | 311.0 | -0.2 |
| EUR/PLN | 4.38 | 0.3 |
| EUR/USD | 1.15 | 0.7 |
| EUR/CHF | 1.10 | 0.1 |
| FRA 3x6 | % | bps chng |
| CZK | 0.28 | 3 |
| HUF | 0.87 | 0 |
| PLN | 1.63 | 0 |
| EUR | -0.25 | 0 |
| GB | % | bps chng |
| Czech Rep. 10Y | 0.49 | -1 |
| Hungary 10Y | 3.39 | 1 |
| Poland 10Y | 3.10 | 2 |
| Slovakia 10Y | 0.86 | -1 |
| CDS 5Y | % | bps chng |
| Czech Rep. | 41 | 0 |
| Hungary | 144 | 0 |
| Poland | 85 | 0 |
| Slovakia | 42 | 0 |
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 risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.