Czech bonds prolonged a negative trend yesterday, as investors looked for quality and left emerging markets. Moreover, U.S. central banker sounded quite hawkish yesterday. The yields added another 2 bps. The market was also affected by earlier comments from the central bank that a rate cut is not likely even when the koruna remains strong. Moreover, yesterday’s drop of the koruna added to the negative pressure.
Today, the February inflation may affect the market. Consumer prices rose by 0.1 %, a touch below market consensus, pushing annual inflation lower to 2.8 %. The outcome proved absence of any significant inflation pressure in the economy and should affect the market positively. Accordingly the unemployment rate dropped only to 9.1 %, while the market expect 9.0 %. Traders may wait for the 2-year bond tender at the noon. Short-term auction, however, usually doesn’t drive the market. The finance ministry sells bonds worth CZK 6 bn.