We have a rather calm week behind us, as the data release calendar was empty and market movements were fairly limited. The exchange rate continued to hover around the 7.58 EURHRK, while the MoF maintained a more aggressive tone at T-bill auctions, continuing to increase its short-term debt stock, amid very low yields at present. Yields were holding broadly steady, with the exception of USD bond yields (which increased to 40bp on a weekly basis), as investors are presumably pricing in the MoFs intentions to place a USD 1.5bn Eurobond in the coming period. On the other hand, the EUR yield showed more resilience, remaining practically flat throughout the week and thus aligning with the 5Y CDS performance (flat at 274bp). The key data event this week should be the January CPI release, for which we are seeing an uptick, on the modified VAT and excise duties framework and heating price hike, suggesting a figure close to the 6% y/y mark.

Source: bne