CBRT Holds Amid Mixed Sentiment

Market Snapshot

Asset	Level	Change
BIST 100	14,335.50	-0.28%
iShares Poland	38.76	-2.07%
EUR/PLN	4.24	-0.04%
EUR/HUF	366.24	+0.92%
EUR/CZK	24.36	+0.12%
USD/TRY	45.02	+0.22%
Brent Crude	105.51	+0.42%
Gold	4,689.20	-0.34%
Bitcoin	77,732.53	-0.60%
Poland 10Y Govt Yield	5.58%	+11.82%
Hungary 10Y Govt Yield	7.13%	+10.03%

Prior Economic Events

Data	Prior	Cons	Actual
Business Confidence Index	101	-	100.60
Consumer Confidence Index	85	-	85.50
TCMB Interest Rate Decision	37	-	37

Today's Economic Events

Data	Prior	Cons	Time
Headline Unemployment Rate	6.10	6.10	23:30

Turkey's CBRT maintained rates at 37%, with business confidence easing to 100.6 and consumer sentiment rising slightly to 85.5 amid persistent inflation.
Poland's M3 money supply grew to PLN 2.804 trillion, up PLN 42.7 billion month-on-month, underscoring liquidity in a robust economy.
Regional yields rose sharply, with Poland's 10Y at 5.58% (+11.82%) and Hungary's at 7.13% (+10.03%), reflecting global risk aversion and Middle East tensions.

Yesterday's Recap

Turkey led yesterday's releases, as the CBRT kept its key rate at 37% as anticipated, highlighting ongoing inflation pressures without a consensus forecast. Business confidence dipped to 100.6 from 101, indicating caution among firms due to geopolitical risks, while consumer confidence improved modestly to 85.5 from 85, suggesting steady household resilience. In Poland, the NBP's latest report showed M3 money supply reaching PLN 2.804 trillion by end-March, a PLN 42.7 billion increase from February, supporting liquidity amid reports of a soaring economy.

Markets reacted variably: Turkey's BIST 100 declined 0.28% to 14,335.50 amid lira fluctuations, and iShares Poland dropped 2.07% to 38.76, while EUR/PLN edged down 0.04% to 4.24, signaling minor zloty strength. Hungary's EUR/HUF climbed 0.92% to 366.24, pressured by fiscal concerns and potential tax cuts. EUR/CZK rose 0.12% to 24.36, and USD/TRY increased 0.22% to 45.02.

Broader CEE bonds weakened, with yields jumping amid EU sanctions on Russia and Middle East uncertainty. Overall, Emerging Europe assets lagged global indices, influenced by commodity shifts like Brent crude up 0.42% to 105.51 and gold down 0.34% to 4,689.20.

The Day Ahead

Poland's March headline unemployment rate is set for release at 23:30 ET, with consensus holding at 6.1% from the previous reading, which could reinforce labor market stability in CEE's biggest economy. No significant data is slated for the Czech Republic, Hungary, Romania, or Turkey, directing attention to global factors such as Middle East tensions and ECB previews noting eurozone economic strains. News on Poland's presidential race, fueled by strong growth, may also draw focus, alongside potential impacts from energy price volatility.

With tomorrow's calendar empty, markets could look ahead to next week's indicators from Hungary or Romania if updates arise.

Other Economic Notes

Poland's economy is drawing international attention, with reports highlighting its expanding G20 role and the EC approving a €7.2 billion recovery plan disbursement to aid investments in hi-tech and defense. The zloty faces headwinds, as the euro exchange rate rose for the fourth straight day, impacted by a stronger dollar and Middle East uncertainty, per Bankier.pl. (cont...)

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Other Economic Notes (continued)

Regional challenges include energy dependencies, intensified by the Iran conflict driving oil concerns, though Turkey contends with distinct issues like lira depreciation and high inflation. Additional notes include Poland eyeing Malaysia for hi-tech and defense ties, and Czech developments with Babiš-linked Agrofert regaining EU subsidy eligibility, sparking criticism.

Global Macro News

Risk aversion pressured Emerging Europe, as Brent crude gained 0.42% to 105.51 on Iran war escalation, raising import costs for Poland and Hungary. The US economy demonstrated resilience amid uncertainty, but Senate Republicans passed a budget resolution in a late-night session, while divisions emerged over constraining Trump's Iran war authority as the 60-day mark nears. Japan's core inflation quickened after five months due to energy worries from the conflict, potentially signaling passthrough effects to Europe.

ECB previews warn of a buckling real economy, with the deposit rate at 2.00% providing scant relief, which may affect CNB and MNB policies; eurozone unemployment stands at 6.70%. The EU imposed its 20th sanctions round on Russian banks after Hungary and Slovakia lifted vetoes, aiming to curb Putin's war economy and ease CEE gas reliance. A €106 billion EU loan to Ukraine was approved post-Hungary's veto lift, bolstering regional stability near Poland.

Saudi economic reassessments amid war and competition underscore Middle East risks, with Iran's economy in free fall from blockades and inflation. Gold fell 0.34% to 4,689.20, and Bitcoin dropped 0.60% to 77,732.53 amid caution.

Emerging Europe Central Banks Watch

Turkey's CBRT held rates at 37% yesterday, sustaining a tight policy against elevated inflation and political factors, differing from CEE banks prioritizing euro alignment. Poland's NBP leverages strong growth and M3 gains to maintain inflation targeting, with no imminent rate changes despite wage dynamics. The CNB, attuned to ECB moves, watches eurozone unemployment at 6.70% for convergence signals, absent recent actions.

Hungary's MNB navigates fiscal pressures from planned tax cuts, heightening EUR/HUF oversight without interventions. Romania's BNR monitors its 8.2% GDP fiscal deficit, challenging EU standards, yet aligns with CNB on ECB responsiveness. Divergences remain, with Turkey's high rates contrasting CEE's lower yields, as all monitor global energy shocks for inflation implications.

Emerging Europe Macro Daily(Beta Mode)