Czech bond yields went slightly down to one-month lows yesterday thanks to a positive inflation outlook and mainly thanks to a bullish development in core bond markets. The government again postponed discussion about the expenditure cuts (more than EUR 2.3bn within two years) which have to be done in order to fulfill the Czech convergence program. The Ministry of Finance will probably decide to decrease those expenditures automatically in the budget proposal for the next year. Today, we belive the bond market will follow the yields in the U.S. and European markets.
(CSOB - Investment research)