Czech bond market clearly decoupled from core markets on Friday. Though German Bunds significantly rebounded, Czech bonds were little changed. The middle of the curve even inched higher, while the long end slid only 1-2 bps. Hence already seen reluctance of Czech market to move higher was pretty strong on Friday.
Investors are not eager to buy government bonds because banks flood the market by mortgage bonds now. Moreover, summer atmosphere limits investors’ activity, too. Thus the spread over euro-yields rose further, particularly to 25 bps in 10-year yields. Today the calendar is not interesting worldwide, hence the market might be quiet.
ČSOB - Investment Research