Polish Bonds Outperform Regional Peers, EUR/PLN Creeps Higher

EUR/PLN has garnered some strength today but struggled to penetrate its 200-DMA which kicks in at PLN4.7118. The rate last sits +291 pips at PLN4.6994 and a clearance of that moving average would open up Nov 22 high of PLN4.7177.

• USD/PLN has bounced off new cyclical lows printed at PLN4.4488 and last deals -81 pips at PLN4.4795 amid a downtick in U.S. equity benchmarks, with DJ and NASDAQ now in the red. The 200-DMA may cap recovery at PLN4.5516, a break here would support the case for a firmer rebound.
• The confluence of NBP repricing and the government's push for more frugal fiscal policy are lending support to Polish government bonds. Below-forecast CPI readings published earlier this week have supported the case for interest-rate stabilisation, with some suggesting that the tightening cycle may have reached its peak. Meanwhile, the Ministry of Finance is pressuring ministries to present spending-cut plans by mid-December. Poland's local-currency bonds outperform in the region, as yields sit 19.4-22.2bp lower at typing, with benchmark 10-year yield printing new two-month lows at 6.34% today. Poland/Germany 10-year yield spread tightened to narrowest levels in more than two months, while Hungary/Poland 10-year differential expanded to widest levels in three weeks.