- KDU-CSL chairman Cyril Svoboda offered CSSD negotiations on support of the budget for 2002 on condition that the minority government of Premier Milos Zeman would withdraw the "opposition agreement" with ODS. CSSD chairman Vladimir Spidla said that he was not rejecting dialogue with the KDU-CSL, one of the 4K member parties, and added that so far no negotiations about the budget for next year had taken place with any political party leader.
- Czech industrial output grew 6.9% year-on-year in May, below the April double-digit growth of 11.4 % and below the market consensus of a 9.5 % growth. The growth continued to be driven by export oriented production (+8.5 % year-on-year), investment-related production (+11.2 %), and production in firms controlled by foreign capital (+11.5%). However, also each of these individual growth rates was lower than its counterpart from April. Industrial sales growth decelerated, too, down to +5.7% from +9.6% in April. Employment in industry rose 1.0 % in May and real wages grew 2.3%. Labor productivity improved by 4.6 % year-on-year in real terms.
- The Chamber of Deputies did not approve the state final account for 2000. Practical impact of the fact on the government of Premier Milos Zeman will be close to zero for neither the Constitution nor other laws say what the government should do in such a case. The rejection of the account was supported with some exceptions by the whole opposition. The opposition was mainly embarrassed about the deficit having exceeded the agreed figure by almost CZK 11bn last year. The Lower Chamber asked the cabinet to submit a draft financing of the deficit without further increase of the state indebtedness. Both Milos Zeman and Vaclav Klaus later said they believed that the preparation of the 2002 state budget would not be negatively affected by the rejection of the 2000 state final account.
- There is a possibility that the Housing Development Fund obtains not only the remaining CZK 4.5bn to cover this year's expenses but also CZK 6bn for its share capital, which the National Property Fund (FNM) owes it since the beginning of this year. So far, the fund has received only a tenth of the CZK 20bn approved by Parliament as the its revenues in 2001.
- The Czech National Bank’s (CNB) monetary base stood at CZK 221.6bn at the end of June, against CZK 223.7bn a month earlier.
- The Czech crown first strengthened and then returned back to morning levels after it failed to break through the 33.72/74 historic low on the CZK/EUR. Trading was technical and very calm. Late on Friday the crown was trading flat from late Thursday at 33.78/82. The crown/dollar stood at 39.63/65, slightly down from 39.58/67 late Thursday.
- Solid demand (6.2bn for the CZK 4 billion issue) for the 6.30/07 state bond at Friday's auction surprised the bearish market but traders saw no turnaround in sentiment. Average yield was 6.79 %, maximum accepted yield reached 6.84 % and minimum yield stood at 6.69 %. The tranche was auctioned after poor inflation data released on Wednesday brought a fresh slump in bond prices. On the secondary market, the bond finished down five basis points from Thursday's close at 97.80/10, yielding 6.77/70 %. The longest state 6.95/16 bond rose 15bps from late Thursday to 98.05/35, yielding 7.16/13 %. The state 6.75/05 added 10bps to 100.90/20, yielding 6.44/35 %.
| late July 13 | bond yield | late July 12 |
| CZK/EUR | 33.78/82 | - | 33.77/84 |
| CZK/USD | 39.63/65 | - | 39.58/67 |
| State 6.75/05 | 100.90/20 | 6.44/35 | 100.80/10 |
| State 6.95/16 | 98.05/35 | 7.16/13 | 97.90/20 |
(Martin Kupka)