The Czech bonds continue to decouple from their German counterparts as the spread at the long end of the yield curve widened by 9 bps. While a release of the higher-than-expected Czech inflation was part of this story, the spread widening could be attributed to rising risk aversion in emerging markets. Hence, in such environment the Czech yields usually follow bounces of the Bund yields, while dips are tracked just partly. Yesterday’s session was a typical example of this scenario, when the Bunds rebounded on global equity sell-off, while the Czech yields closed only little changed.
The domestic eco calendar is again interesting today, as GDP figures for the first quarter have been released. The data have confirmed that growth is supply driven and CNB should not be worried by demand pressures, since real consumption grew just 3.4% y/y. So we think the market could calm down a bit today and the bonds might try to catch some of the yesterday gains of German Bunds.
(CSOB - Investment research)