With no domestic events the Czech market
followed the movement on euro bond
markets yesterday and lost further ground.
However, Mr.Holub, head of CNB monetary
section, with his interview woke the market
from lethargy. He said that Czech interest
rates can’t follow eurozone interest rates
increase and that CNB inflation prognoses
takes into account an amplification of the
0.5% difference between the Czech and
euro zone interest rates. Therefore the
Czech market erased its morning losses and
ended close to unchanged.
April’s inflation and trade balance were
released this morning. Slight inflation
decrease (against estimates) and the
positive trade balance might support some
steepening of the yield curve today.
Today, the Finance Ministry also sells CZK 7
bn bonds in 2-year auction today. We expect
that the market could absorb the whole
volume without any difficulties.
(CSOB - Investment research)