Daily Overview of Global Markets & the SEE Region (Thursday, July 27, 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 announced no change in its monetary policy stance at its 24-25 July meeting, with market focusing on the statement which contained two main differences compared to the previous one. Firstly, the balance sheet unwinding may start “relatively soon” instead of “this year”. Secondly, inflation “has declined and is running below 2%”, instead of June´s phrase that inflation was running “somewhat below” its 2.0% target. The market considered Fed’s wording at the statement as a relatively dovish twist mirroring a softening in the Fed’s confidence on measures of inflation. Reacting to the above, the EUR/USD bounced to a fresh 2.5 year high of 1.7777 in Asian trade on Thursday, before retreating to levels around 1.1730 in European trade. In the rates markets, US government bonds rallied with yields on 10-yr US Treasuries falling about 5bps overnight at 2.28%.

GREECE: The Greek Prime Minister Alexis Tsipras in an interview yesterday expressed his satisfaction regarding the issuance of a new syndicated €3 billion 5-year government bond for the first time since 2014 at a yield of 4.625%. He also appeared confident that the issuance constitutes the first step towards a lasting return of the Hellenic Republic to the wholesale funding markets that will allow the country to successfully complete the 3rd Economic Adjustment Programme in August 2018. The new issuance comprised of €1.43 billion new money and €1.57 billion switch tenders accepted in full by holders of the outstanding 4.75% notes due in 2019.

SOUTH EASTERN EUROPE

CESEE MARKETS: The majority of emerging market assets rallied in the aftermath of the FOMC meeting which concluded yesterday, while upbeat corporate earnings results and positive data from China also favored risk sentiment.

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