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2019/12/09 / Erste Group Research

Poland Weekly Focus | Global events in focus

Final inflation for November expected at 2.6% y/y, marking increase compared to previous month. Surging food prices remain key inflationary factor. Trade talks, British elections as well as Fed and ECB rate-setting meetings should attract market attention.

December 13 | Food prices drive inflation. We expect that the flash inflation reading for November will be confirmed at 2.6% y/y. Surging food prices remain the key growth driver and compensate for dropping energy and oil prices. We currently expect electricity costs for households to remain unchanged next year. Therefore, headline CPI should peak at 2.7% in 1Q20 and ease in the remainder of the year due to the base effect.

Bond market drivers | 10Y mostly stable. It was a calm week on the long end of the Polish curve, which has continued to move in a sideways trend since mid-August. The 10Y yield went only marginally down by 5bp and closed the week below the 2.0% margin. Unlike the Polish market, the German long end of the curve ended up on a roller coaster throughout the week. The 10Y Bund touched -0.26% at the beginning of the week, to fall sharply by 10bp within one session. As a result, the spread over the 10Y Bund has narrowed further and gone below 230bp.

FX market drivers | Global sentiment positive for zloty. Over the course of the week, the zloty made up for the previous week’s losses and went below 4.30 vs. the EUR. The globally weaker US dollar helped the zloty and other regional currencies. This week, the most important factor for the EURUSD is whether there will be an at least partial trade agreement between the US and China before December 15. Otherwise, additional US tariffs on Chinese imports would come into force from December 15.

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General information

AuthorErste Group Research
Product nameCEE Country Update
Topic in focusMacro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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