Initially, bonds inched higher among speculation that the central bank would cut interest rates. Nevertheless, high GDP growth was not very supportive for such scenario. Moreover, core markets failed to supply the market with clear direction. Hence, the bonds were little change for the rest of the day. The central bank didn’t deliver any monetary policy decision. Significant correction on the FY market lifted pressure from the central bank to act immediately against the strong koruna. Moreover better-than expected GDP figure was an argument against the cut. Thus we have to wait for the end of the month when the CNB’s Board will have monetary policy on agenda. We still believe in a 25 bps rate cut. Today’s macro data has little importance for the bond market. Thus traders might inspire on core markets.
(CSOB - Investment research)