Yields correct downwards at 3-month T-bills auction.

Yields correct downwards at 3-month T-bills auction. Investors demonstrated ample demand at the 3-month T-bills auction organised by the State Debt Management Agency (AKK). Total valid bids amounted to HUF 97.4bn against the HUF 25bn offer of AKK, which was entirely placed. The average yield achieved at the auction stood at 7.94%, which is 8bps below the average yield achieved at the previous tender for similar papers (on Dec 5) and 6bps below Monday’s secondary market benchmark. Meanwhile the HUF reached a 9-month high on Tuesday trading at 254.00/10 against the EUR late in the day. We note that EUR/HUF 255 level was defended by some option barriers and the HUF earlier bounced back its attempts to break it. Last night’s decision of the FOMC to keep rates on hold in the US came as no surprise and no significant impact should be exerted on emerging market currencies. In fact the Fed statement included the same paragraph on inflation as at the October’s sitting and despite the slightly more concerned stance over growth (especially housing market) it still appears early for rate cuts in the US. The next auctions organised by AKK are scheduled for Wednesday and Thursday when HUF 30bn in 6-month and HUF 40bn in 12-month T-bills will be offered, respectively.