* Polish currency could gain later in week, dealers say
* Czech yields rise then shed gains after rate hike noise
(Updates with Polish GDP, fixed income data, quotes)
By Marius Zaharia
BUCHAREST, Aug 30 (Reuters) - The zloty failed to react on
Monday to strong Polish GDP but could gain as volumes rise later
this week, traders said, while Czech bonds also took in their
stride comments from a central banker in favour of rate hikes.
Poland's economy, a clear outperformer in central Europe,
grew by 3.5 percent on the year in the second quarter, above
expectations for 3.2 percent. []
Dealers said a market holiday in London reduced trading
volumes, keeping the zloty stable, but the unit could rise later
this week in reaction to the data when inflows from foreign
investors gather pace.
Bonds also failed to react as analysts played down any
direct impact on monetary policy, which the central bank has
focused on zloty moves and inflation that has been below
expectations in recent months.
"The data will not have a significant impact on the upcoming
Monetary Policy Council decision, as the Council is in a
wait-and-see mode and is clearly waiting for the October
inflation projection," said Monika Kurtek from BPH.
At 0901 GMT, the zloty <EURPLN=> was flat on the day against
the euro, while the Czech crown <EURCZK=> and the Hungarian
forint <EURHUF=> were down 0.2 percent.
Romania's leu <EURRON=>, which has decoupled from regional
peers in recent months due to concerns about central bank
intervention, rose 0.3 percent on a "relatively big" corporate
order, dealers said.
Central European economies have grown strongly in the second
quarter, but recent austerity measures and an expected slowdown
in the global recovery could hit GDP by the end of the year,
analysts said.
CZECH YIELDS
Yields for shorter-dated Czech paper fell from morning highs
and were steady on the day after a third member of the central
bank's seven-member policy board spoke in favour of a rate hike
over the weekend. []
Robert Holman told weekly Tyden that the bank would likely
raise the main interest rate by 25 basis points by the end of
this year or early in 2011, bringing it into line with the
European Central Bank's main rate.
Dealers said more hawkish comments could start to hit a
rally in Czech bond markets.
"At the moment everyone is waiting for (Governor Miroslav)
Singer to make comments," said a Prague fixed-income dealer.
"But I would expect (market) rates to go higher on Holman's
comments."
The 2-year interest rate swap (IRS) has ticked up since
hitting a 3-month low last week, rising to around 1.58 percent
from 1.53 percent -- still off an August high of 1.65 percent.
The yield on the 9-year benchmark <CZ1002471=> is still
hovering around a lifetime low of 3.189 percent, down almost a
percentage point since June as it tracks western peers' yields
lower, backed by government austerity pledges.
Hungarian bonds were stable after yields rose over 70 basis
points last week on financing worries as the government ruled
out a new aid deal with the International Monetary Fund.
[].
Romanian markets were waiting for the finance ministry's
September debt issuance plans, which are expected to be
published this week.
The ministry failed to meet its issuance targets over the
last few months due to its strategy of capping yields at 7
percent, but pressure is growing on debt managers to meet market
demands.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.752 24.698 -0.22% +6.33%
Polish zloty <EURPLN=> 3.974 3.972 -0.05% +3.27%
Hungarian forint <EURHUF=> 283.43 282.95 -0.17% -4.61%
Croatian kuna <EURHRK=> 7.273 7.28 +0.1% +0.5%
Romanian leu <EURRON=> 4.226 4.24 +0.33% +0.27%
Serbian dinar <EURRSD=> 105 104.963 -0.04% -8.69%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 111bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +111bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +112bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +400bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +386bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +324bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +637bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +599bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +511bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1101 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Patrick Graham, John Stonestreet)
