CEE Interest Rate Analysis for April 11 – 24, 2019

By: Quinnipiac University's Economics Research Team, Bryan Doherty

Source: Eurostat and own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields)


The dominant trend for the central eastern European interest rate index was that most countries saw their yields rise dramatically and then largely normalize over the 10-day period of April 11 – 24. All countries but Poland saw an increase in their bond yields. Slovakia saw the biggest initial increase with their bond yields increasing by nearly 13% in only 3 days. Romania saw a similar increase during the early part of the 10-day period as did Hungary although their movements were less pronounced.


Czechia and Poland were the two contrasting cases this week. Poland’s bond yields declined and remained low. Czechia looked like it was following a much dampened version of the general trend with a mild rise early on and return to its initial level but then saw a spike near the end of the week.


HISTORIC RATES

Source: Eurostat and own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields). The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.


Relative to their own historical trends, first, it is clear that Poland’s only movement during this period was simply for bond yields to return to their historical average level.


Slovakian yields, although taking quite a wild ride in percentage terms have struggled to return to even their 3-month lower bound. Romania and Hungary, on the other hand, both have bond yields that seems to persist at their upper bound levels. This suggests that we should continue to see movement in the yields for all three countries over the coming weeks as their either return to their means or settle on new levels.


THE DATA: Interest Rates by Country

Source: Eurostat and author’s own calculations. Daily EMU convergence criterion bond yields (i.e., central government 10-year bond yields).

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