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OTP Morning Brief 15 APRIL 2021 OTP Morning Brief • Crude oil prices surged more than 4% as US oil inventories fell unexpectedly sharply • Raising rates before 2022 is highly unlikely, and will be preceded by tapering bond purchases • Stock markets closed mixed in Europe; the NASDAQ and the S&P dropped in America • The BUX, and MOL, ended in the red • The USD's continued weakening drove the EUR/USD closer to 1.2 • The USA will publish important economic indicators; Turkey's central bank makes rate decision today www.otpresearch.com 1 15 APRIL 2021 Europe's and America's stock exchanges closed mixed; Hungary's BUX underperformed again Ending the previous rise, stock prices in Europe moved in a narrow range in Wednesday's directionless trading. The DAX shed 0.2%, Italy's index edged 0.1% lower, while France's CAC40 rose by 0.4%, to a new high. The English and Spanish stock markets gained nearly 0.7%. The different sectors moved in both directions: in Germany, technology companies and the financial sector fared well, while cyclical industrial and retail stocks fell, and the technology sector also did poorly in France. The sentiment did not benefit from the euro area's worse-than-expected February industrial production data (-1.6% year-on-year, missing the forecast -0.9%), which confirms the view that the continent’s economy made a weak start to the year. In addition, using Johnson & Johnson single-dose vaccine has also become uncertain in Europe, due to blood clots concerns. The EU is to publish its position next week, but this can further slow Europe’s vaccination programme, delay its re-opening, and may worsen its Q2 growth prospects. The BUX (-0.8%) fell again, and underperformed its peers in the CEE region, where Prague's PX index eased 0.6%, and Poland's WIG grew by 2%. Once again, MOL (-1.6%) weighed on the BUX, even though both oil prices and its regional peers (PKN, OMV) posted gains. Richter and OTP also fell; once again, MTelekom was the only blue chip to gain. US stock markets closed mixed and the USD weakened, despite the strengthening economic activity and big banks' better-than-expected earnings The Fed’s Beige Book paints a favourable picture on the U.S. economy. Growth is accelerating due to strong economic policy support, declining number of covid cases, and the resulting surge in consumption, but all this is accompanied by rising inflation. In addition, Jerome Powell reiterated that no interest rate hike was likely before the start of 2022 and it would be preceded by scaling back bond purchases. His words, coupled with a jump in oil prices, sent bond yields higher. The better-than-expected revenue and earnings figures in the reports of JPMorgan, Goldman Sachs and Wells Fargo helped the latter two's share prices rise markedly. But the sentiment went sour; indices reversed from near-peak levels, and trading on stock exchanges lacked a single direction. The Dow, in which traditional sectors are overrepresented, edged higher, but the S&P (-0,4%) and the Nasdaq (-1%) fell, dragged down by tech giants. Energy companies, bolstered by oil prices, the utilities, materials, and the financial sector were the best performers. The US dollar's further weakening drove the EUR/USD closer to the psychological limit of 1.2, to 1.199. The EUR/HUF fell below 359, as did Hungary's long-term yields, the market still prices significant rate hike In Wednesday's lacklustre trading in the CEE region's foreign exchange market, the HUF and PLN slightly firmed (by about a quarter percent), ending the depreciation that broke the strengthening trend of recent weeks. Bucked the trend again, the Czech koruna slightly weakened. Although long-term US and German yields rose yesterday, Hungary's benchmarks sank: the belly of the curve and long-term yields dropped by 3-5 points, and the IRS curve fell even sharper. The current yield environment is consistent with the existing one-week deposit rate of 0.75%, which is to rise by 50 basis points by the end of 2021, and by a further 50 bps by the end of 2022. This is about 10-20 basis points lower than what the market had priced one or two weeks earlier. At yesterday's switch auctions, the ÁKK offered HUF 10 www.otpresearch.com 2 15 APRIL 2021 billion in 2029/A, 2034/A, and 2038/A fixed-rate bonds each, in exchange for the 2022 and 2023 securities. The shortest one was four times oversubscribed, and the longer ones were twice oversubscribed. The Government Debt Management Agency raised the allotted amount by HUF 5 billion for the 2029 bonds, and it sold HUF 3 billion more than planned in the 2038 bonds. In yesterday's tender, the MNB allotted HUF 10 billion 5Y collateralized loan; after the settlement, the volume will rise to HUF 2,483 billion; the interest rate remained at 0.75%. Oil prices have materially risen, owing to low US inventories On Tuesday, oil prices rose, bolstered Optec's upwardly revised demand forecast and the intensifying tension in the Middle East, but on Wednesday it appeared that US oil inventories have fallen sharper than had been thought. As a result, crude oil prices rose by 4-4.5% yesterday. Bitcoin fell 2.5% from a historic record, and gold price also shed half a percent. Today's highlights Asia's indices moved in both directions in today's trading: Japan's index was seen rising, while Korea, India and China were slightly in the red. Europe may open mixed, index futures suggest: the DAX and the FTSE were pointing higher, while the French index may inch lower. Turkey's central bank, headed by the new governor, will make interest rate decision today. His predecessor was fired by the Turkish president because he had hiked interest rates to stabilize the lira; a rate cut would put Turkish assets under severe pressure. The important economic indicators from the USA may confirm the bounce in America's economic growth. In the usual weekly labour market data, initial jobless claims are expected to decline. The March retail sales figure is expected to indicate a 6% month-on-month jump, as households have probably started to spend the checks received under Joe Biden's programme. The industrial production data for March are expected to indicate almost 3% month/month increase. Today Hungary publishes the February construction output data. Under its new auction system, today the ÁKK auctions 12M T-bills and variable-rate bonds (2027/B), offering HUF 15 billion and HUF 20 billion, respectively. At the MNB's regular one-week deposit tender, the 0.75% interest rate will most likely remain, but it will be worth checking the announcement of the tender at 12:00 and of its result at 15:00 (CET). www.otpresearch.com 3 15 APRIL 2021 Stocks Bonds Commodity & FX Daily Daily Product Product Daily Product Close change YTD (%) Yield YTD* Close change YTD (%) name name change* name (%) (%) S&P500 4125 -0.4 9.8 VIX 17.0 2.0 -25 WTI 63.2 4.9 30.2 DOW 33731 0.2 10.2 US 2Y 0.16 0.2 4 Brent 66.58 4.6 28.5 Nasdaq C. 13858 -1.0 7.5 US 10Y 1.63 1.8 72 Gold 1734.9 -0.6 -8.5 DAX 15209 -0.2 10.9 GER 2Y -0.69 1.3 2 Silver 25.52 0.4 -3.4 CAC40 6209 0.4 11.8 GER 10Y -0.26 3.4 31 EUR/USD 1.1980 0.3 -1.9 FTSE 100 6940 0.7 7.4 PT10Y 0.43 14.2 40 EUR/GBP 0.8695 0.1 -2.7 Global FTSE MIB 24575 -0.1 10.5 IT 10Y 0.79 4.5 25 EUR/NOK 10.0493 -0.7 -4.1 Stoxx600 437 0.2 9.4 SP 10 0.41 2.8 37 USD/CAD 1.2521 -0.1 -1.6 - Banks 129 0.6 19.4 iTRAXX 50.7 -0.8 6 AUD/USD 0.7728 0.0 0.4 Nikkei 225 29601 -0.1 7.9 JPY 2Y -0.13 0.0 0 USD/JPY 108.93 -0.1 5.5 SSEC 3376 -1.2 -2.8 JPY 10Y 0.09 0.0 7 GBP/USD 1.3779 0.2 0.8 RTS 1490 2.2 7.4 RUS10 7.1 -19.0 114 USD/RUB 75.887 -0.1 2.0 WIG20 2012 1.9 1.4 POL 10 1.5 -1.0 26 EUR/PLN 4.55 -0.2 -0.1 Regional PX50 1095 -0.6 6.6 CZ10 1.9 -2.7 66 EUR/RON 4.927 0.1 1.4 BUX 42515 -0.8 1.1 3M DKJ 0.61 0.0 33 EUR/HUF 358.35 -0.3 -1.2 OTP 12935 -0.2 -3.2 1Y 0.69 0.0 30 USD/HUF 299.11 -0.5 0.7 MOL 2046 -1.6 -6.6 3Y 1.33 -4.0 63 CHF/HUF 324.19 -0.7 -3.3 Hungary MTelekom 420 1.9 10.5 5Y 1.85 -3.0 49.0 PLN/HUF 78.69 0.0 -1.0 Richter 8620 -1.8 15.9 10Y 2.67 -5.0 59.0 GBP/HUF 412.22 -0.3 1.5 * In the case of bond yields, the change is in basis points instead of percentage (VIX and iTRAXX not included). Sources: Bloomberg, OTP Research www.otpresearch.com 4 15 APRIL 2021 Data Cd.
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