Frantisek Taborsky

This week's dollar correction has not gone too far. Despite the heavy one-way positioning of the dollar, investors lack clarity on the timing of Trump’s tariff threats, preventing them from reducing dollar holdings. Further consolidation is likely among the $ Majors as traders await a Trump dialogue in Davos today. Elsewhere we see downside risks to the Norwegian krone from today's Norges Bank meeting and see the Turkish lira staying attractive despite another 250bp rate cut today

Romania's government is proposing a lower deficit than last year, but the market still have questions given May's presidential election. The finance ministry wants to focus on local funding sources including retail bonds and T-bills. MinFin should be able to balance the financing needs, simultaneously higher yields and volatile demand

Poland indicates a second straight year of historically record gross borrowing needs and government bond issuance. At the same time, the Ministry of Finance continues to diversify funding sources to attract demand. The resulting funding split will depend heavily on market interest. We see fiscal risk as balanced for this year, however, elections remain on the calendar ahead

Public finances continue to tighten and the primary balance remains stable. However, inflation and rapidly rising debt service costs are driving up gross borrowing needs. In nominal terms, the issuance of Turkey government bonds (TURKGBs) will rise significantly this year, but it remains almost unchanged in relative terms. With the anticipated rate cuts from the Central Bank of Turkey and the maturity calendar, we expect issuance to be concentrated in the middle of the year

Foreign investors are exiting CEE4 markets and we see unfavourable conditions for this year. Governments have to rely more and more on domestic demand. Turkey should see a continued return of foreign investors to the local market. In terms of sovereign ratings, we are positive on Turkey but negative on Hungary and Romania

Hungary plans to further tighten the fiscal deficit and focus shifts to HGBs

The government continues to consolidate public finances, but the supply of bonds will be slightly higher this year due to the unfavourable redemption schedule

Given the current fragile state of financial markets, we do not see any room for rate cuts in Hungary in the near future

The combination of high debt service costs and the redemption calendars further increases borrowing needs across the board

The Bank of Japan delivered a well-telegraphed 25bp hike, but surprised markets on the hawkish side by materially raising its inflation forecasts. We expect two more hikes this year which can pave the way for a stronger JPY outlook. In other news, Trump surprised by saying he’d rather not hit China with tariffs, adding short-term pressure on the dollar