The previous fast strengthening of the koruna threatened the inflation target of the CNB and the market therefore expected 50bps cut. Now the higher than 25bps rate cut is now less probable due to the koruna correction. Attractiveness of the Czech bonds for foreign investors remains relatively low because of low yields. But still they are preferred by the domestic investors managing huge cash surpluses. Yesterday, the bond yields went up by approximately 2-6bps and the market turnover was high but not so intensive as on Wednesday. The calm down and only marginal yield changes is the probable scenario. The market will watch the American yields and in the afternoon fall asleep before weekend.
(CSOB - Investment research)