Institutional Investors Still Bullish on CEE
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After a hot fall, a spring tornado could wreak havoc in France
Barely half a year after this year’s French budget was passed, the wrangling over the 2027 budget is about to begin, but that’s not all, because France will also hold a presidential election next spring. During the first public presidential debate, some of the radical candidates put forward ideas that were, at times, unconventional. Although the presidential election in late April still seems far off, based on the latest polls, if no candidate secures enough votes and a runoff is held, it cannot be ruled out that two radical presidential candidates will face off against each other. Market participants may have begun to price in this growing uncertainty, as the yield spread between French and German 10-year government bonds has started to widen again in recent weeks. The period ahead promises to be full of twists and turns, so it will be worth keeping a close eye on developments in French domestic politics.
Commodities - Technical Analysis
Gold and silver prices have retested their uptrend lines, so the long-term trend may continue. Oil prices have broken out of a contracting pattern, which may signal the start of another upward wave. Natural gas prices have also begun to rise, signaling a buy. In the case of copper, the main uptrend remains in effect, and there are currently no signs indicating a change in the trend’s structure. Following significant gains, wheat and corn have become heavily overbought, increasing the likelihood of a correction.
Over 30 senior financial professionals, active in CEE markets and managing more than EUR 6.5 billion in assets under direct control, participated in our Institutional Investor Survey. Here, we highlight the most notable insights.
Respondents taking higher risk relative to benchmark in equities and favoring EM and CEE exposures over the next 3 months. Institutional sentiment on CETOP country performance shows a clear rotation in expectations. Poland strengthens as the top pick for outperformance, while Hungary also gains traction.
The survey shows a clear shift toward neutrality on Max Index duration positioning as participants weigh two offsetting forces: (1) the government’s decision to raise the budget deficit target, which pushed yields higher from early November and increased perceived risk, and (2) elevated purchases of government bonds by Hungarian banks to reduce extra profit tax, which supported the demand side and helped stabilize yields.
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