PLN: Zloty Lags Regional Peers, Banking Stocks Take Hit From Planned Tax Tweaks
The zloty lags behind EMEA peers and EUR/PLN trades at 4.2641, 74 pips higher on the session, as market participants scrutinise planned tax changes and await comments from the Jackson Hole Symposium. A break above trendline resistance at 4.2827 would bring Apr 16/Dec 25 highs of 4.3102/4.3114 into view. Bears look for a pullback towards May 15 low of 4.2230.
- Yesterday saw a couple of developments generating two-sided risks for the monetary policy outlook. Monthly data from the statistics office showed that nominal wage growth slowed markedly, countering concerns about the earlier uptick. Financial markets took the data in stride and pricing did not move much. Meanwhile, President Nawrocki vetoed a bill extending electricity price freeze, which may revive the MPC's angst about a potential energy-driven rebound in headline inflation (which, for the record, most analysts dismiss as unrealistic).
- The Finance Ministry denied working on the taxation of mandatory reserves held at the NBP, contrary to earlier guidance from Minister Andrzej Domański. This comes after the Ministry announced plans to raise corporate-income taxes for banks from 19% currently to 30% in 2026, and then lower it to 26% in 2027 and 23% in 2028. At the moment, it is unclear why this option was chosen over the proposed windfall tax, but it is part of broader fiscal consolidation efforts, which will also include hikes to certain sin taxes and measures to improve tax collection.
- Polish banking stocks took a hit from the news about the planned sectoral corporate tax hike unveiled after hours on Thursday. The WIGBANK Index has suffered heavy losses, shedding 7.9% so far, weighing on the broad-based WIG Index (-2.8%) and benchmark WIG20 (-3.4%).
- POLGB curve has bear steepened in morning trade; yields sit up to 1.2bp higher at typing.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EGBS: OAT/Bund Spread Now Little Changed Through July, But French Risks Linger
The 10-year OAT/Bund spread has tightened ~4bps since last Thursday’s close, currently at ~66.5bps and now little changed on the month. However, OATs have still underperformed other EGB peers during this period, and ongoing political/fiscal risks will limit scope for meaningful reprieve.
- Although PM Bayrou’s 2026 budget proposals have faced criticism from opposition Parties, his minority government has not yet been subject to a fresh censure motion. That likely delays immediate political risks to the autumn, when the budget process begins in earnest.
- However, it is likely that Bayrou will need to push the budget through using Article 49.3 of the French constitution in order to avoid a vote in the National Assembly. This would risk a censure motion.
- Otherwise, he will have to negotiate with opposition parties such as the Socialists to push the budget through. This would surely water down his proposed fiscal consolidation measures - a difficult trade-off against a backdrop of already unfavourable fiscal arithmetic.
- The 10-year BTP/OAT spread remains around ~16.5bps, but the trend is still in favour of further narrowing. We noted yesterday that the net issuance backdrop over the next few months also favours BTPs and Oblis over OATs.
BONDS: Bear Steepening Stemming From Japan Holds, Supply Eyed
Little to counter the bearish steepening impulse seen in Asia trade so far, with impending Bund & gilt supply eyed and no meaningful reaction to Japanese PM Ishiba’s pushback against media speculation suggesting that he is set to step down.
- Major global FI futures at/just off session lows, respecting yesterday’s ranges.
- EGB spreads to Bunds little changed to 1.5bp tighter, move aided by the equity rally stemming from news of a U.S.-Japan trade deal.
SOFR: Asia Bear Steepening Holds, SFRZ5 Lifted
A fairly sedate start to London trade for U.S. fixed income contracts, with the Asia bear steepening moves in the long end and SOFR futures STRIP holding.
- SOFR flow headlined by a recent 4K buyer of SFRZ5, paying 96.105.
