Czech bonds continued to march lower on Friday. The Czech market followed suit, as both German Bunds and U.S. Treasuries were in negative territory. The yield curve moved higher by another 3 bps, as the market expects the central bank to be more aggressive in the second half of the year. Moreover, the minutes showed that the bank doesn’t intend to lower interest rates even the koruna remains as strong as EUR/CZK 28.22. Nevertheless, the minutes didn’t bring a lot of new, they only confirmed earlier comments of governor Tuma.
Today, the calendar is empty, therefore the market may play usual tracking of German Bunds. However, later in the week the calendar is pretty busy, as inflation and GDP are due. While the January CPI may show little inflation pressures ones more, the GDP figures may show the economy grew at historical high pace. Therefore the atmosphere might be negative for the bonds, therefore we prefer be short.