The previous significant rise of the koruna made interest rate cut almost sure and the market considered even larger cut than only 25 bps. Thus only buyers were on the bond market in the morning. The yields lost some 5 bps across the board. However, later drop on the core markets balanced the market’s atmosphere and bonds gave up all previous gains. However CNB Rezabek comment on rate cut spurred the market again (see FX part). Thus bonds closed slightly higher in the end.
Today data were not supportive for the cut, but are not against it. Thus the cut of 25-50 bps at the end of the month is still in the cards. Despite the initial correction the positive atmosphere might prevail.
(CSOB - Investment research)