Polish Yields Drop to 3-Week Low on Manufacturing; Zloty Gains

Yields on Polish two-year notes fell to an almost three-week low and the zloty advanced as a report showing manufacturing worsened for a sixth month in September, bolstering expectations for an interest-rate cut this week.

The yield on notes maturing in July 2014 fell three basis points, or 0.02 percentage point, to 4.02 percent as of 5:23 p.m. in Warsaw, the lowest since Sept. 11. The zloty advanced 0.5 percent to 4.0956 per euro, the steepest gain among more than 20 emerging-market currencies tracked by Bloomberg.

The purchasing managers’ index, a gauge of manufacturing, fell to 47 from 48.3 in August, signaling goods production declined at the fastest rate since June 2009, HSBC Holdings Plc said today. Poland’s central bank will cut the main interest rate a quarter point to 4.5 percent on Oct. 3 to spur economic growth, according to 25 out of 33 analysts in a Bloomberg survey. The other eight expected no change in borrowing costs.

The data show “Polish policy makers are clearly behind the curve when it comes to interest rate cuts,” Adam Antonik, an economist at Bank Pekao SA (PEO) in Warsaw, wrote in an e-mailed research note. “We expect them to reduce rates” this week.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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