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Bond Market Volatility Becoming Headline News

  • Following acute market volatility across Polish bond markets last week, Rzeczpospolita write that the situation is becoming more and more difficult, with debt servicing costs being ratcheted higher. They project that the public finance sector deficit could rise to 7% of GDP next year. This is compounded by continued uncertainty on EU funding to make for a higher risk premium in Polish markets.
  • Volatility across the bond markets is spilling into the banking sector, with banks struggling to meet MREL capital requirements, with the cost of issues to meet the requirements now exceeding the cost of capital, according to DGP. It’s now becoming increasingly possible the BFG (bank fund guarantee scheme) could delay deadline related to the program.
  • An IQS survey shows that 60% of the 35-55 population feel “significant” inflationary pressure, with 47% of respondents having to reduce their standard of living. Elsewhere, one of the largest food producer lobbies has warned of higher food prices and possible shortages should the government not step in to cover energy bills for the biggest producers.
  • Parkiet cite analysts as seeing retail sales on the decline after February next year as the refugee influx effect subsides. Similarly, tax breaks and consumer habits of tapping savings will likely roll off.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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