A worldwide correction
pushed bonds lower ahead of appearance
of Fed’s chairman Alan Greenspan in the
Congress. Nevertheless, we saw only a
price action but no deals yesterday. No one
has appetite to trade after yesterday’s
auction. The strong first quarter GDP
growth failed to spur market, as it should not
imply any central bank’s action (more in FX
part). Summing up, recent data showed
the economy is quite strong, but domestic
demand is weak. There are no inflationary
pressures, as inflation at 18-month low.
Nevertheless, the figures were slightly
stronger than expected, thus probability of a
rate cut fell.
Today the market may follow core markets,
as no data are due. Bonds might open
stronger after recovery of euro denominated
bonds in the evening.
(CSOB - Investment research)