Public finance is sliding again, as the National Property Fund is out of money, waiting for privatization revenues that were supposed to come in as much as CZK 92 bil. this year. However, the Cabinet is biding its time and privatization schedule is regularly breached. Thus, Konsolidacni banka will have to provide more loans still.
A high ODS official revealed how the party thinks the country should be run - before the forced administration on IPB was decided, the government should have called ODS. And yes, he mentions names when discussing positions at state dominated firms but it is meant as a mere suggestion, no deals are done, of course.
The Czech koruna had a strong closing last week, when it gained 10 hallers against the euro and even 30 hallers against the dollar. The koruna approached 35.60 CZK/EUR level on Friday (only to strengthen further this morning), after weakening to 35.8 CZK/EUR on Thursday when dealers feared of a CNB intervention. With respect to the dollar, the koruna again attacked the 38 CZK/USD level, eliminating all of the last week's loses.
As we expected in the latest comment, bond market was bullish on Friday, though more quiet than usual. After interest swaps dropped slightly on late Thursday, Friday morning seen some short coverings as well as client buying, and the whole yield curve was shifted down. Longest term papers recovered after a row of selloffs, most bullish were the corporate ones - particularly Konsolidacni 10.875/04 after huge client business strengthened by a massive 70 basis points. Our recommendation now changes from strictly bearish to range trading - keep selling on offer side, buying on bids, while watching the interest rates developments.
Current benchmark prices: MoF 6.75/05 99.80-10 (+20 bps), MoF 6.30/07 96.40-70 (+20 bps), MoF 6.40/10 96.05-35 (+25 bps).
(Ondrej Schneider and Dalimil Vyskovsky)