Polish 10-year bond yields dropped to the lowest since 2006 and the zloty advanced after the European Central Bank and the Federal Reserve signaled they will continue to support economic growth, boosting appeal of riskier assets.
The yield on 10-year notes declined six basis points to 4.67 percent as of 5:37 p.m. in Warsaw, the lowest since March 2006 and down 122 basis points, or 1.22 percentage point, so far this year. The zloty gained 0.3 percent to 4.0688 per euro, extending this week’s advance to 1.2 percent, the steepest gain among more than 20 emerging-market currencies tracked by Bloomberg.
The ECB yesterday reiterated it stands ready to start buying bonds as soon as the necessary conditions are fulfilled while Fed policy makers said they may be able to change the size of the central bank’s monthly asset purchases. A report today showing an unexpected drop in the U.S. jobless rate boosted confidence in the world’s largest economy and sent emerging-market stocks to a two-week high.
“There is the risk-on backdrop for emerging markets which tends to provide support to the long end of curves,” Benoit Anne, head of emerging-market strategy at Societe Generale SA, wrote in an e-mailed report today.
Foreign buyers of Polish bonds are “stable” investors including central banks from Asia and the Middle East, Deputy Finance Minister Wojciech Kowalczyk told Rzeczpospolita newspaper in an interview published today.