Daily Overview of Global Markets & the SEE Region (Thursday, June 15, 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 FOMC raised the Federal Funds rate by 25bps to a 1.00-1.25%, as expected, and provided some details on how it plans to start reducing its balance sheet “relatively soon”. The medium-term interest rate projections were unchanged suggesting one more hike by the end of this year and three hikes in 2018 and 2019 respectively. The updated Summary of Economic Projections was largely in line with expectations containing a few mild surprises, mainly an upward revision in 2017 real GDP forecast to 2.2% from 2.1% and a significant downward reassessment in 2017 PCE inflation projection to 1.6% from 1.9%. The Fed’s relatively more hawkish than expected tone favoured USD while global equity markets were under pressure in early trade on the back of poor US data and reports conveying that the US President is under investigation. Long-dated US Treasuries retained a positive tone favored by weaker-than-expected US inflation data with the 2/10-yr yield spread flattening to its lowest level in nearly nine months.

GREECE: Focus today is on the Eurogroup that is convening this afternoon, while the Euroworking Group that is currently underway is reportedly working on the technical details of the agreement. The Eurogroup will discuss the following issues: 1) the assessment of the progress made in the fulfilment of the prior actions attached to the 2nd programme review. 2) The medium-term fiscal targets beyond 2018. 3) The possible debt measures that may accrue, if necessary, after successful completion of the programme in mid-2018. The framework for this discussion is the one concluded at the Eurogroup meeting of 24 May 2016, outlining debt measures for Greece in the short, medium and long term.

SOUTH EASTERN EUROPE

CESEE MARKETS: Emerging market assets were broadly under pressure earlier on Thursday amid mounting risk aversion. In FX markets, the Romanian leu extended yesterday’s losses in view of mounting domestic political uncertainty.

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