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CEE MARKETS-Stocks get a boost from U.S. stimulus hopes

WARSAW, Aug 11 – Central European stocks tracked global peers higher on Tuesday, as risk sentiment worldwide received a boost from hopes that an agreement can be reached on a U.S. stimulus package. U.S. President Donald Trump tweeted on Monday that Democrats wanted to meet to make a deal on coronavirus-related economic relief, after talks between Democrats and members of his administration broke down last week. “Probably until we know the shape of the fiscal plan in the United States, hopes that it will be good for the market will cause share prices to rise,” said Bartosz Kulesza, an analyst at Pekao in Warsaw. At 0928 GMT Warsaw’s WIG 20 was up 1.84%, while Prague’s PX index had risen 1.86% and the main index in Budapest was up 0.27%. Currencies were looking for direction ahead of data later this week, which will include GDP for Poland and Romania. The Polish zloty was 0.05% firmer against the euro at 4.4002. The Czech crown and the Hungarian forint were both 0.03% weaker at 26.20 and 344.87 respectively, while the Romanian leu softened 0.11% to 4.8345. Hungarian headline inflation accelerated to an annual 3.8% in July from 2.9% in June, while core inflation rose to a seven-year high, the Central Statistics Office (KSH) said. Core inflation HUCPIC=ECI came in at an annual 4.5%, rising from 4% in June. The National Bank of Hungary said that tax-adjusted core inflation was 4.1% in July versus 3.5% in June. “The central bank’s (MNB) concern that inflation could continue to fall well below its inflation target was a key argument for the 15 basis point rate cuts in June and July,” Commerzbank said in a note. “If inflation continues to rise and the market doubts that the MNB will react accordingly, the HUF is likely to come under pressure. In this respect, the market will be watching the MNB’s interest rate meeting at the end of August with great interest.” The National Bank of Hungary will hold government bond auctions on Tuesday. The NBH restarted government bond purchases last month after a two-month break. Yields on the longest-dated Hungarian government bonds have come down substantially, by around 40 bps, since the central bank last month resumed its quantitative-easing programme. Czech benchmark 10-year yields rose almost 10 basis points to 0.903% on Tuesday, while Polish 10-year yields rose just under 2 basis points to 1.285%. CEE SNAPSHOT AT MARKETS 1128 CET CURRENCI ES Latest Previous Daily Change bid close change in 2020 Czech crown <EURCZK= 26.2000 26.1920 -0.03% -2.93% > Hungary <EURHUF= 344.8700 344.7500 -0.03% -3.98% forint > Polish zloty <EURPLN= 4.4002 4.4025 +0.05% -3.27% > Romanian leu <EURRON= 4.8345 4.8290 -0.11% -0.96% > Croatian kuna <EURHRK= 7.4800 7.4785 -0.02% -0.46% > Serbian dinar <EURRSD= 117.5000 117.6000 +0.09% +0.06% > Note: daily calculated from 1800 CET change Latest Previous Daily Change close change in 2020 Prague 931.91 914.8900 +1.86% -16.47% Budapest 36401.47 36302.78 +0.27% -21.01% Warsaw 1856.73 1823.15 +1.84% -13.64% Bucharest 8689.18 8620.18 +0.80% -12.91% Ljubljana <.SBITOP 850.15 846.64 +0.41% -8.18% > Zagreb 1594.08 1591.24 +0.18% -20.98% Belgrade <.BELEX1 672.36 672.64 -0.04% -16.13% 5> Sofia 433.99 431.99 +0.46% -23.61% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 0.1380 0.0760 +083bps +7bps R> 5-year <CZ5YT=R 0.3650 0.0250 +107bps +2bps R> 10-year <CZ10YT= 0.9030 0.0960 +141bps +8bps RR> Poland 2-year <PL2YT=R 0.1380 0.0040 +083bps +0bps R> 5-year <PL5YT=R 0.6730 0.0100 +138bps +0bps R> 10-year <PL10YT= 1.2850 0.0190 +179bps +0bps RR> FORWARD 3×6 6×9 9×12 3M interban k Czech Rep 0.33 0.33 0.38 0.34 <PRIBOR= > Hungary 0.63 0.63 0.62 0.60 Poland 0.19 0.17 0.17 0.23 Note: FRA are for ask prices quotes ***************************************************** ********* (Reporting by Alan Charlish in Warsaw, Aniat Komuves in Budapest and Radu Marinas in Bucharest; Editing by Nick Macfie)

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