Czech bonds dropped yesterday, the yield curve moved up by 4 bps. The Czech market initially tracked lower German Bunds, but suffered larger losses than the euro market in the end. Thus, the negative spread over euro yields tightened. Sellers dominated to the market. The long yields rose by almost 20 bps in last three weeks, which made some investors to squared its position. The koruna didn’t help to the market as it stays flat. Today, a released state
budget balance may not affect the market. Investors may wait for the Minutes due on Friday. The tightening of negative spread over euro yields may help stabilize the market today.
(CSOB - Investment research)