They added some 5 bps in yields as they followed German Bunds lower. Later on, they erased all losses to close little changed. The market assessed Bunds’ losses as insignificant for the Czech market, because there will be no rate hike in foreseeable future. In contrary, the market believes in rate cut under some circumstances. Moreover, Bunds were pushed lower due to drop of the euro, which is raising likelihood of a hike in eurozone but not in the Czech Republic. Today the market will lack any domestic incentive again. Hence traders may look at core markets again, but the bonds may resist to follow the eurozone market lower, if it happens.
(CSOB - Investment research)