Parliament had a busy Friday: it first overrode a Senate veto and approved a controversial amendment to the CNB act. The amendment limits the CNB independence and has been criticized by the CNB, ECB and, well, Patria…
Second, income tax act was amended: tax brackets were adjusted, roughly in line with rising wages. The amendment also makes it illegal to deduct an unpaid invoice from income tax (unpaid invoices received, however, remain to be counted as an income).
No major change on the Czech koruna markets: stable vis-a-vis the euro at 34.85 CZK/EUR and only marginally stronger vis-a-vis the dollar at 41.90 CZK/USD. There were no substantial news on the market that should influence trading today.
It was more a quiet day on bonds, except for a few issues. New tax law that was approved in parliament on Friday, causes bonds issued before January 1, 1998 to be taxed same as new bonds, which sent prices on bonds (previously known as "old taxation") down rapidly. However it's still not sure whether the amendment will be approved in Senate and if it really means what bond traders think.
However again, this would be bearish impulse for longer term old-taxed issues (Konsolidacni 10.875 and CEZ5), and bulish impulse for new-taxed ones plus non-taxed mortgage bonds.
Current benchmark prices: MoF 6.75/05 99.15-45 (+15 bps), MoF 6.30/07 94.15-45 (+20 bps), MoF 6.40/10 92.10-40 (+25 bps).
(Ondrej Schneider and Dalimil Vyskovsky)