Polish Yields Slide to Low as Output Contracts; Zloty Steady
The yield on Poland’s benchmark 10- year notes fell to within one basis point of a record low after industrial output unexpectedly declined last month, boosting the case for interest rate cuts.
The yield on notes due in October 2023 dropped four basis points, or 0.04 percentage point, to 3.87 percent as of 4:53 p.m. in Warsaw. The zloty pared intraday gains to trade little changed at 4.0831 against the euro.
Production fell 0.8 percent from a year earlier, after a 4.6 percent increase in October, the Central Statistics Office in Warsaw said today. That compared with a median estimate for a 0.5 percent increase in a Bloomberg survey of 26 economists. The European Union’s biggest eastern economy is feeling the impact of the recession in the euro area and the central bank cut rates by a quarter point for a second month in December.
“The data raise the probability of a more pronounced rate cut in January,” Ernest Pytlarczyk, chief economist at BRE Bank SA in Warsaw, wrote in an e-mailed comment today.
Forward rate agreements, used to speculate on interest rate levels, showed traders’ bets for 106 basis points in reductions by mid 2013, according to data compiled by Bloomberg.
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