Czech bonds were on bumpy road yesterday, but they were little changed in the end. They inched lower in the morning, but the market was rather quiet. Nevertheless, the yields shot up after higher-than-expected US inflation. However, bonds quickly recouped and returned to the morning’s level, as a panic on core markets disappeared. Hence the bonds closed almost unchanged. Vice-governor Singer calmed down expectation, that the CNB Board will cut interest rates again. He said, that the weak koruna put off some pressure from the central bank to cut rates. We remind you that Singer was at beginning of such expectation since he previously said there is room for lower rates given current absence of any inflation pressure. We keep our scenario that the board will hold the rates unchanged in April. Today the calendar is empty thus the Czech bonds may track core markets.
(CSOB - Investment research)