They outperformed their German peers and initially ignored drop of US Treasuries. Overall positive sentiment in the region pushes Czech yields some 5 bps lower. Benign inflation and thin government bond offering weighted, too. Thus the spread over German yields tightened slightly. Bonds outperformed IRS thus koruna swap spread tightened, too. Today the calendar is busy. Above all issuance calendar is due at 10:00. We expect the Finance Ministry will offer only CZK 25 bn in the second quarter. It may disappoint the market an might push prices higher. Moreover, the ministry should revealed budget results after the first two month of the year in the afternoon. Nevertheless, bonds should opened a bit weaker after overnight drop of US treasuries, but they might recover quickly.
(CSOB - Investment research)