Daily Overview of Global Markets & the SEE Region (Tuesday, May 16, 2017)

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Dr. Platon Chief Market Economist, Deputy General Manager, Eurobank Ergasias S.A.,

HIGHLIGHTS

WORLD ECONOMIC & MARKET DEVELOPMENTS

GLOBAL MARKETS: The USD was weaker across the board in European trade weighed down by a dovish shift in short-term Fed rate hike expectations following disappointing US manufacturing-related data. Supported by broad-based USD weakness and increased optimism over the euro area’s growth prospects, EUR/USD extended its recent gains hitting a fresh six-month peak of 1.1036 earlier today. Elsewhere, Bund yields moved north with long-dated paper underperforming on supply jitters. EMU sovereign debt spreads narrowed with Portugal outperforming. Meanwhile, the 10-yr US/Bund yield spread remained in a narrowing trend.

GREECE: The Eurogroup that convened yesterday reportedly discussed the medium term debt relief framework for Greece without, however, reaching a specific proposal. It is understood that all parties involved agree that any deal will not diverge from the framework that was agreed at the May 2016 Eurogroup which foresees that a set of debt relief measures will be implemented if needed following the successful implementation of the ESM programme. The issue will be discussed anew at the May 22nd Eurogroup along with the assessment of Greece’s compliance with the preliminary technical agreement of May 2nd while the ESM will reportedly bring forward proposals regarding the structure of the next loan tranche disbursement. According to press reports, all sides express their will and confidence for a global agreement then or by mid-June at the latest.

SOUTH EASTERN EUROPE

CESEE MARKETS: The majority of CESEE assets firmed in morning European trade on Tuesday after Q1 2017 data released earlier today showed that economic activity in the region picked up pace across the board over that quarter, remaining impressively robust.

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