Turkish Sentiment Dips, Polish Jobless Steady

Market Snapshot

Asset	Level	Change
BIST 100	12,727.10	-1.83%
iShares Poland	34.95	-1.52%
EUR/PLN	4.27	+0.00%
EUR/HUF	388.04	+0.30%
EUR/CZK	24.51	+0.30%
USD/TRY	44.45	+0.20%
Brent Crude	101.30	-6.21%
Gold	4,438.10	+1.43%
Bitcoin	68,669.95	-3.70%
Poland 10Y Govt Yield	4.99%	-2.16%
Hungary 10Y Govt Yield	6.48%	-2.85%

Prior Economic Events

Data	Prior	Cons	Actual
Consumer Confidence Index	85.70	-	85
Business Confidence Index	104.10	-	101
Headline Unemployment Rate	6	6.10	6.10

Today's Economic Events

Data	Prior	Cons	Time
No events available

Turkish consumer and business confidence indices declined, signaling weakening sentiment amid persistent inflation pressures.
Poland's headline unemployment rate aligned with consensus at 6.1%, reflecting stable labor market conditions in the largest CEE economy.
Regional equities and currencies faced headwinds, with Turkish stocks down sharply and CEE bond yields easing on global risk-off mood.

Yesterday's Recap

Emerging Europe markets experienced mixed but mostly negative movements, with Turkey's BIST 100 index dropping 1.83% to 12,727.10 amid falling confidence indicators. In Turkey, the Consumer Confidence Index fell to 85 from a previous 85.7, while the Business Confidence Index declined to 101.00 from 104.1, highlighting ongoing economic challenges in the region's largest economy. Poland's headline unemployment rate met consensus expectations at 6.1%, up slightly from the previous 6%, underscoring resilient labor dynamics despite broader slowdown signals.

The iShares Poland ETF slid 1.52% to 34.95, reflecting investor caution, while the EUR/PLN held steady at 4.27 with no change. Hungarian and Czech currencies weakened modestly, with EUR/HUF up 0.30% to 388.04 and EUR/CZK also up 0.30% to 24.51, pressured by global risk aversion. Polish and Hungarian 10-year government yields fell, with Poland's to 4.99% (-2.16%) and Hungary's to 6.48% (-2.85%), as safe-haven flows supported bonds.

No major data emerged from the Czech Republic, Hungary, or Romania, keeping focus on Turkey's sentiment dip and Poland's steady jobs figures.

The Day Ahead

The Emerging Europe calendar remains light today with no scheduled economic releases across Poland, the Czech Republic, Hungary, Romania, or Turkey. Investors will monitor any unscheduled developments, such as potential FX interventions by the CBRT given recent USD/TRY volatility at 44.45 (+0.20%). Attention may shift to broader EU events, including any updates on energy supply amid Middle East tensions, which could impact import-dependent CEE economies.

Tomorrow also features an empty slate, potentially allowing markets to digest global cues like U.S. recession signals. Traders should watch for spillover from commodity moves, with Brent crude down 6.21% to 101.30, affecting Turkey's external balances.

Overall, the quiet period underscores the region's sensitivity to external shocks over domestic data.

Other Economic Notes

Broader themes in Emerging Europe highlight persistent energy vulnerabilities, particularly for EU members Poland, Czech Republic, Hungary, and Romania, which face risks from Middle East conflicts disrupting oil supplies. (cont...)

Page 1

Other Economic Notes (continued)

Turkey, as an outlier with distinct geopolitical ties, could see amplified inflation from commodity volatility, given its high baseline rates. Convergence efforts toward euro adoption remain uneven, with Poland's stable unemployment supporting fiscal metrics, while Hungary's political dynamics, including upcoming elections, add uncertainty to EU fund flows.

Global Macro News

Global macro developments are casting shadows over Emerging Europe, with multiple reports indicating rising U.S. recession odds as Wall Street identifies cracks in the economy, such as a flattening yield curve noted by Fed's Evans, potentially curbing demand for CEE exports. German Defense Minister's warning of a 'catastrophe' from war on Iran underscores risks to global energy markets, directly threatening oil-importing nations like Poland and Turkey.

UAE comments on Iran's Strait of Hormuz threats amplify fears of supply disruptions, which could spike Brent prices and pressure inflation in the region. In Asia, HSBC's positive outlook on Malaysia's 2026 growth contrasts with Korea's central bank warnings of inflation and sluggishness due to Middle East issues, mirroring potential divergences in EM resilience. Sweden's forecast of dark clouds over the world economy, driven by trade uncertainties and Middle East conflicts, highlights export challenges for Hungary and the Czech Republic.

South Korea's 5 trillion won bond buyback for market stabilization signals proactive policy amid global volatility, a model that could influence CEE central banks. U.S. Senator Vance's planned visit to Hungary ahead of elections adds a geopolitical layer, potentially affecting EU relations and fund disbursements for the region.

These factors collectively heighten Emerging Europe's exposure to external shocks, with Turkey most vulnerable due to its energy dependencies and inflation profile.

Emerging Europe Central Banks Watch

Central banks in Emerging Europe displayed policy divergences, with the National Bank of Poland (NBP) maintaining a cautious stance amid stable unemployment data, supporting inflation targeting credibility as headline rates hover near targets. The Czech National Bank (CNB) and Hungary's Magyar Nemzeti Bank (MNB) remain attuned to ECB moves, where the deposit rate stands at 2.00%, potentially paving the way for synchronized easing if eurozone unemployment at 6.70% signals softening; both CNB and MNB have shown responsiveness to ECB convergence for euro adoption criteria. Romania's Banca Naţională a României (BNR) focuses on FX stability, with no recent interventions noted, aiming to align with EU norms despite slower convergence progress.

(cont...)

Continuation

Emerging Europe Central Banks Watch (continued)

Turkey's Central Bank of the Republic of Turkey (CBRT) operates under political constraints, facing credibility challenges from high inflation and recent USD/TRY pressures, diverging from CEE peers by prioritizing lira defense over rate cuts. Policy convergences are evident in inflation targeting among EU members, while Turkey's unique dynamics lead to frequent FX interventions. Overall, ECB linkage strengthens for CNB and MNB, but regional divergences persist due to Turkey's outlier status and varying euro adoption timelines.

Emerging Europe Macro Daily(Beta Mode)