Although German Bunds rose, Czech market at best was unchanged. Investors asses current yields as too low in environment of rising US rates. Moreover, people were cautious
ahead of today’s 4-year bond tender. As we wrote above the event of the day is the bond tender. The Finance Ministry will offer 4-year benchmark (3.8/2009) worth CZK 4 bn. Current atmosphere on the market is not supportive for the auction, but the amount and the maturity is rather low, respectively short. Thus bids should exceed supply in the end. Nevertheless, we expect bond yields rise today, as many investors and traders wants to sell part of their bonds now. Deputy Finance Minister Janota statement (see FX part) have no significant impact on the market. In contrary, falling koruna pushes bonds lower, since it discourage foreign investors and lower likelihood of rate cut on upcoming central bank meeting. Czech bond yields (8-year)rose for 3 days on change of regional mood.
(CSOB - Investment research)