CEEMEA Macro Strategy Mid-Year Outlook: Through the Strait, But Not All Boats Move Together

Research evidence excerpt

CEEMEA Macro Strategy Mid-Year Outlook: Through the Strait, But Not All Boats Move Together

Europe Insight

May 15, 2026 07:21 PM GMT

Morgan Stanley & Co. International plc+MCEEMEA Macro Strategy Mid-Year Outlook Arnav Gupta

Strategist

Through the Strait, But Not All Arnav.Gupta@morganstanley.comJames K Lord +44 20 7677-0382

James.Lord@morganstanley.com +44 20 7677-3254

Boats Move Together Neville Z Mandimika

Neville.Mandimika@morganstanley.com +44 20 7425-2509

We stay selectively constructive across CEEMEA, favouring

idiosyncratic stories over broad beta, with Hungary and Turkey

offering the clearest opportunities in FX and carry. At the same

time, rates divergence is widening, with Hungary outperforming

Poland, Turkey facing upside risks to rates, and others largely

priced for current conditions unless the global backdrop shifts

materially.

Key Takeaways

Hungary: We favour HUF across FX and rates, with EUR/HUF skewed toward 340

and 5y5y trading further below Poland following the change in government and

risk‑premium compression.

Poland: We prefer payer positions in Poland 5y5y versus Hungary 5y5y, with

long‑end steepening risks driven by fiscal dynamics and oil sensitivity.

Turkey: We like short USD/TRY carry and pay rates, but see upside risks to rates

as inflation remains sticky and policy may need to tighten further.

Egypt: We stay cautious on Egypt carry, with weak real yields and FX

vulnerability limiting risk‑reward despite improved perception of monetary policy

effectiveness.

South Africa: We remain neutral USD/ZAR and rates, with curve flattening

supported by fiscal credibility, but limited near‑term steepening catalysts.

Czech Republic: We stay neutral on CZK FX, with scope to receive front‑end

rates as CNB delays hikes despite market pricing vs Hungary.