There are few noticeable news, as the summer holidays set in. The SEC threatens to fine two brokerage firms for trading the IPB shares even after the trading was suspended. The Minister of Finance in a long interview blamed ODS for fostering "crony capitalism" and confirmed that the IPB management style and control was "unstandard." He estimated that the total costs of the banking sector bail-outs in the Czech Republic might be anywhere in a range of CZK 200 - 300 bil. (10 - 15% of GDP).
The Czech koruna stuck to the falling euro on its way down against the dollar. Thus, no change in the koruna-euro exchange rate (still around 35.30 CZK/EUR) and a massive depreciation vis-a-vis the dollar. As the euro went below the 90 cents level again (it dipped there in the end of May), the koruna fell to 39.20 CZK/USD.
Czech bonds rose slightly in Tuesday trading, a bullish mood after a few consecutive days of downfalls. Drop in the IRS was the main reason, and the longest benchmarks recovered from recent historic lows. The rise came after CPI figures release, which in fact was not different from market expectations. This is why we still remain rather bearish, and we recommend range trading again - sell on waves up, keep positions given at downfalls.
MoF introduced another strange feature for Friday's bond auction, leaving the maximum acceptable yield not set. This will probably result in high uncertainty among investors, however, MoF said it might buy the volume itself. Curious, but we have to wait until Friday to see the result, and criticize, respectively.
Current benchmark prices: MoF 6.75/05 100.20-50 (+30 bps), MoF 6.30/07 96.05-35 (+40 bps), MoF 6.40/10 95.00-30 (+35 bps).
(Ondrej Schneider and Dalimil Vyskovsky)