Czech bonds experienced higher volatility on Monday. The reason was mainly in the Czech parliamentary election and its irresolute results. However, the absence of many foreign investors due to holiday in Western Europe and a decline of euro zone bonds played its role as well. At the end the Czech yields did not change significantly still the yield curve steepened a little.
Tomorrow the Ministry of Finance plans the CZK 7 bn. 2.55%/2010 bond auction. We expect that the whole volume will be subscribed, but the demand will exceed the supply slightly only. On the Czech market there is not much interest for such maturities these days.
A few importa nt Czech figures are released this week. They start with April’s trade balance today and go on through May’s inflation on Thursday and GDP on Friday. Nevertheless today’s trade balance could hardly have any impact on the market. Therefore the most important domestic stroke may come from either from the political scene or from euro-zone bond market, which might get volatile ahead of Thursday’s ECB meeting.
(CSOB - Investment research)