Bets on further Federal Reserve rate cuts weighed heavily on U.S. bond yields, providing a boost to gold prices, which saw strong positive traction amid investors seeking safe-haven assets. The uncertainty surrounding global trade remains high, exacerbated by former U.S. President Donald Trump's tariff remarks. Trump’s statement regarding potential 25% tariffs on Canada and Mexico, while no immediate announcement was made for all trade partners, added to the market's anxiety.
In Europe, the CEE currencies began the week strengthening against the euro, reflecting regional economic resilience. Meanwhile, Poland's monetary policy took center stage as central banker Ludwik Kotecki expressed his expectation for interest rate cuts to commence in July 2025, following the presidential elections in May and June. Kotecki advocated for a 100 basis points reduction this year, diverging from Governor Adam Glapinski’s preference to delay easing until 2026.
The Slovak Debt Agency capitalized on high demand by raising €812 million in bonds, surpassing their target of EUR 600 million, with maturities spanning from 2028 to 2043. In Romania, the government successfully sold bonds maturing in 2038, achieving a yield of 7.9%, marking the highest rate in nearly two years. These developments underscore the shifting dynamics within European debt markets.
The GBP faced pressure as the UK ILO Unemployment Rate increased to 4.4% over the three months leading to November. Concurrently, the EUR/USD currency pair continued to languish in negative territory below 1.0400 during Tuesday’s European session.
The TPU index, derived from automated text searches across seven prominent newspapers including The New York Times and Wall Street Journal, provides a gauge of media sentiment regarding trade policy uncertainty. This index reflects the heightened anxiety in markets over trade negotiations and potential tariff implementations.
Erste Bank Sparkassen (CR) and its affiliates have noted that while their data sources are reliable, they do not assume responsibility for the accuracy or completeness of the information presented. This caveat is crucial for market participants relying on such reports for decision-making.
In Romania, the bond market remained robust as they achieved their planned issuance target despite the challenging yield environment. These actions highlight the balancing act countries face between financing needs and market conditions.