CZECHIA: Koruna Loses Ground Over Holiday Period, Czech Data Prints Exceed Expectations
Jul-07 07:51
- The koruna sold off sharply over two back-to-back Czech public holidays, which sapped CZK liquidity and left the currency exposed to external drivers. Global markets were largely driven by the combination of hawkish Fedspeak and upbeat US data over that period, which took its toll on EM FX space. The rally in EUR/CZK was capped by its 200-DMA and the rate has ticked away from there this morning.
- Looking back at June budget data, Ceska Sporitelna write that the rare monthly budget surplus of CZK56bn was mostly due to an extraordinary net influx of funds from abroad (particularly the EU), which may not be repeated later this year. They note that correcting for these funds, last month's budget balance was +CZK12bn and June is typically "the nicest month for Finance Ministers" due to seasonal tax payments.
- Czechia's trade balance widened to +CZK11.8bn in May from the revised +CZK10.3bn prior, slightly exceeding the +CZK11.8bn consensus forecast. Industrial output shrank 1.6% Y/Y in May, which was a better outcome than the expected 3.3% contraction.
- Ukrainian President Volodymyr Zelensky arrived in Czechia last night in his first visit to the country since Russia's full-scale invasion. He will continue meetings with Czech officials today.
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EURIBOR OPTIONS: Large downside fly
Jun-07 07:49
ERM4 96.62/96.1295.62,p fly, bought for 9.5 in 20k vs 96.655
EGBS: € Supply Applies Weight
Jun-07 07:47
A brisk start for € IG supply, coupled with the market making room for today’s regional sovereign issuance (headlined by the long 10-Year SPGB), allows the broader EGB space to cheapen in recent trade and spreads vs. Bunds (at the 10-Year point) to widen.
- BTPs continue to give back the tightening that was seen on Friday (which lacked an overt headline driver and was seemingly driven by broader cross-market flows).
- Bunds twist flatten on the day, with the major benchmarks on that curve running 3bp cheaper to 1.5bp richer. Core/semi-core curves also twist flatten, while BTPs bear flatten.
- As noted elsewhere, ECB speak headlines the regional docket today, with de Guindos, Panetta, Knot and Vujcic all slated. All of those individuals have spoken within the last week or so, perhaps limiting the scope for meaningful market impact. That could leave the aforementioned supply dynamics at the fore.
EGB SYNDICATION: Lithuania: 10Y EUR Benchmark - IPT
Jun-07 07:42
EUR Benchmark 10Y Fixed (June 14, 2033) mid-swaps +115bp Area
- Settlement: June 14, 2023
- Bookrunners: Citi (B&D), SocGen
- May price today
Source: BBG
