State budget discussion will be an interesting one as government departments are submitting their demands for public funds. As opposed to the austerity budget proposed by the Ministry of Finance, individual ministries' demands would open the deficit by "tens of billions." Even the clear winner, the Labor Ministry wants further CZK 12 bil. disregarding a massive 12% boost it received already.
Reality once more strikes back at our over-ambitious social planners: unemployment among recent graduates shot up to 13% of all unemployment. The social-conscious law made impossible to take graduates for a three-month probation period, so employers turn them off entirely. Simple, isn't it?
The Czech koruna slightly hovered around its newly found stability level of 35.30 CZK/EUR, as no new trading impetus was coming. Everybody was expecting anxiously today's macroeconomic numbers, especially inflation. With respect to the dollar, the koruna was a bit more lively, but closed at 38.90 CZK/USD, unchanged from the opening level.
Czech bonds fell massively on Monday. With rising IRS and CPI figures to be released sell-offs started right at the beginning of the day. Though some have buying at the mid of the day, this only seemed to have been minor short coverings as sellers appeared immediately after the rise. Longest bonds were most falling again, reaching another record lows. We tend to be bearish again, with CPI figures deciding, Friday's government bond auction will not be a bullish point anyway.
Current benchmark prices: MoF 6.75/05 99.90-20 (-25 bps), MoF 6.30/07 95.65-95 (-25 bps), MoF 6.40/10 94.65-95 (-30 bps).
(Ondrej Schneider and Dalimil Vyskovsky)