Polish bond yields headed for their first weekly drop in six as speculation the Federal Reserve will scale back its stimulus receded before the U.S. central bank’s policy meeting next week, boosting appetite for riskier assets.
The yield on 10-year debt fell for a third day, taking the five-day decline to four basis points, or 0.04 percentage point. The zloty weakened 0.1 percent to 4.2234 per euro by 4:32 p.m. in Warsaw, depreciating for the first time in three days.
The 10-year slid 15 basis points to 3.69 percent today, which is 39 basis points above the level on May 22 when Fed Chairman Ben S. Bernanke said the central bank could reduce its monthly debt purchases if the employment outlook shows sustainable improvement. The U.S. monetary policy makers are scheduled to meet on June 18-19.
“Bonds are up around the globe as the markets expect the Fed not to suggest pulling out from quantitative easing just yet,” Michal Jochymek, senior central and eastern Europe fixed-income trader at BNP Paribas in Warsaw, said in an e-mailed response to Bloomberg questions today. “Since we’ve seen yields rise by nearly 100 basis points in the last few weeks, a decline like this is nothing extraordinary.”
The Wall Street Journal reported yesterday the Fed may push back on expectations of a rate increase.
Other emerging market bonds have also rallied, with the rate on Hungary’s 10-year debt tumbling 40 basis points to 5.689 percent and Turkey’s similar-maturity security retreating 33 basis points to 7.02 percent.
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