Ahead the auction the bonds slightly fell, as German Bunds opened in reds and traders tried to push prices lower due to the auction. The demand in the tender was pretty in line with our expectation at CZK 9.5 bn, while the Ministry offered CZK 6 bn. The interest was only slightly lower than in previous auctions. Moreover rising Bunds in the afternoon lured strong interest in the second uncompetitive round of the auction. All in all, the demand in both rounds of the auction was CZK 10.4 bn. Therefore the market pared most of earlier losses in the afternoon. Moreover the rest of the yesterday’s loss might be covered this morning.
The market may digest the auction and better development of bunds today. Thus the bonds may continue to rise. However, every one may keep watching core markets.
(CSOB - Investment research)