The yields lost some 5 bps in the middle and the end of the curve. The market got lift from surprisingly subdued inflation, which showed 0.1 decline in consumer prices in March. As we wrote it pushed annual inflation to 1.5 %. Of course, it raised the chance the central bank would cut interest rates again. However, we still believe the bank will hold the rates flat. The bonds decoupled from the core markets’ action, hence the yield spread slightly tightened.
Today, the February industry output is due, but hardly affect the market. Thus traders will look inspiration abroad. Tomorrow, the minutes from the March central bank meeting will be released and may disclosed actual opinions in the board.
(CSOB - Investment research)