CEE MARKETS-Bond yields rise after higher-than-expected CPI figures
* Hungary, Romania Aug CPI come in higher than forecast * Government bond yields rise, also tracking Bunds * Budapest, Bucharest cbanks watched after CPI surprise By Sandor Peto BUDAPEST, Sept 11 (Reuters) - Central European government bond yields rose on Tuesday after higher-than-expected August inflation figures from the region, and as Bund yields also increased.
After data on Monday showed a bigger-than-forecast pick-up in Czech inflation in August, Romania's and Hungary's figures also came in above expectations on Tuesday.
Hungary's headline inflation was unchanged at 3.4 percent, supported by rising food prices. Analysts said that may mean inflation will hold above 3 percent - the midpoint of the central bank's (NBH) 2-4 percent target range - for the rest of the year.
The NBH is unlikely to change record low interest rates at its meeting next Tuesday, when it will also discuss its quarterly inflation report, but it may disclose some details of future policy tightening, market participants said.
"September meetings usually offer a good opportunity if they want to communicate a change in policy," one Budapest-based fixed income trader said.
Hungarian government bond yields rose 2-5 basis points relative to Monday's fixing, with the curve steepening and 10-year paper trading at 3.52 percent.
Corresponding Bund yields rose about 2 basis points to a 5-week high as growing hopes of fiscal restraint in Italy and a deal for Britain's exit from the EU eroded demand for safe-haven debt.
Hungarian yields have risen 15-20 basis points in the past three weeks, luring back foreign buyers. Their Hungarian bond holdings rose last week to the highest level since January 2016.
In contrast, Romania's 10-year bond yield has fallen more than 50 basis points since late June as inflation fell sharply to 4.6 percent in July from a 5-year high of 5.4 percent in June, contributing to less hawkish rhetoric from the central bank.
Comments from the Romanian central bank will be closely watched after Tuesday's data showed inflation rose to 5.1 percent in August, above analysts' 4.8 percent forecasts. Core inflation was little changed.
"We think that disinflation will resume in September but our forecast about an inflation rate of 3.5 percent in December is at risk after today's data," Erste analyst Eugen Sinca said in a note.
The yield on Romania's 10-year government paper was bid higher by 2 basis points at 4.87 percent.
The leu eased by 0.1 percent to 4.6326 against the euro by 0950 GMT.
Other Central European currencies gave up the gains they posted earlier in the session when the dollar was retreating. The greenback's firming periods have often caused selling in the region's currency markets this year.
CEE SNAPSHOT AT MARKETS 1150 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1080.15 1082.850 -0.25% +0.18% 0 Budapest 36823.56 37202.89 -1.02% -6.49% Warsaw 2244.51 2270.83 -1.16% -8.80% Bucharest 8318.38 8331.45 -0.16% +7.28% Ljubljana Zagreb 1792.88 1797.95 -0.28% -2.71% Belgrade Sofia 628.19 628.80 -0.10% -7.27% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year 5-year 10-year Poland 2-year 5-year 10-year FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 1.91 2.08 2.19 1.52 (PRIBOR= ) Hungary 0.60 0.81 1.03 0.21 Poland 1.77 1.79 1.85 1.71 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Kirsten Donovan)
