Yields in CEE move up following the Iran conflict
On the radar
- Manufacturing PMIs declined in Romania and Poland in February and increased in Czechia to threshold of 50.
- 4Q25 GDP details were released in Poland and Serbia.
- Today, Romania publishes producer prices at 8 AM CET.
- Czechia and Hungary will publish 4Q25 GDP breakdown at 8.30 AM and 9 AM CET respectively.
- Croatia will publish February’s flash inflation at 11 AM CET.
Economic developments
Today, we look at the reaction of the markets following the Iran strikes. We have already reported that oil prices have increased. While on Monday morning they were at 78 USD per barrel (Brent), one day later prices went up to 80 USD per barrel. Gas prices increased even more due limited alternative routes for transport of LNG from Qatar which temporary suspended its LNG production. Stock markets posted losses and long-term yields increased on March 2 both in the core markets and in the region. Such development is not entirely consistent with safe haven flows as we would not expect long-term yields to increase to such extent on the core markets. Germany 10Y yields went up by around 7 basis points on the 2. of March and the range of increases in the region was quite similar apart from Croatia. In Poland the 10Y yields moved up slightly more as concerns about the expected rate cut on Wednesday could have arisen. It has been noted, however, that prior to the US attacks on Iran, long term yields have been declining. It is either correction or anticipation of period of higher inflation. Even if the conflict ends within short period of time, price adjustment will be most likely a lengthier process.
Market movements
As for other news regarding markets, the CEE currencies have depreciated against the euro during Monday. EURCZK moved up to 24.36, EURHUF to 380 and EURPLN is at 4.24. In Poland, central bank begins its two-day rate setting meeting (decision due Wednesday) as conflict in the Middle East escalates. Higher oil prices and weakening zloty could potentially dampen the central bank’s enthusiasm for monetary easing. On Monday, Romania sold RON 425 million of government papers maturing in 2030 and RON 569 million of government papers maturing in 2040. In Czechia, budget moved to deficit in February after posting a surplus in January.
Author
Erste Bank Research Team
Erste Bank
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