Large dose of domestic data
Today’s large dose of domestic data from March – on the labour market, industrial and construction production, and PPI inflation.
In our opinion, data on real activity will be quite strong and will show a rebound after a weak start to the year, still under the influence of a harsh winter.
This effect should be especially visible in the case of construction.
Meanwhile, PPI inflation may approach zero, or even break it under the price effect of the conflict in the Middle East.
That would be the first positive reading since mid‑2023.
In addition, data from the US (retail sales and real‑estate market) and the German ZEW index will be published.
Second round of negotiations between the US and Iran
The second round of negotiations between the US and Iran, announced by Donald Trump on Monday, has not yet taken place. Trump said on Monday evening that Vice‑President Vance had already departed for Pakistan, where talks were to take place, but as Reuters and CNN reported, Vance was still in Washington on Monday evening.
According to CNN, Vance and the US delegation will depart for Pakistan only on Tuesday, and talks will begin on Wednesday. According to Axios, the delay of the US delegation was due to waiting for confirmation from Iran of participation in the talks. The agency reported that Iran’s supreme leader approved participation in the talks on Monday night.
"No need to amend the 2026 budget"
Finance Minister Andrzej Domański said that despite the introduction of the CPN program, he sees no need to amend the 2026 budget.
We also do not see such a need, and in our opinion it would arise in the case of a prolonged conflict in the Middle East, which would weaken domestic economic activity and force the government to increase the scale of support for households.
Euro EURPLN fell from 4.236
Information about the re‑blocking of the Strait of Hormuz weakened the zloty, but on Monday the domestic currency slightly gained and EURPLN fell from 4.236 at the start of the day to 4.232 at the end of the session. The zloty performed better than the forint, as the EURHUF rate rose from 362.0 to 362.6, and the crown, with EURCZK rising from 24.28 to 24.29.
The euro, on the other hand, strengthened against the dollar. Information about the delay of peace talks in Pakistan did not affect the EURPLN rate, which was at 4.231 at the start of the day.
After a clear strengthening of the debt market on Friday, Monday brought a correction. Yields jumped sharply by 6‑7 basis points after hopes of ending the Middle‑East conflict fell, but remained lower than a week ago, especially on the long end – by almost 15 points.
A similar, though slightly weaker upward move could be observed in the IRS and FRA markets. In the coming days, the market will remain sensitive to information about the course of talks in the Middle East.
