Short-dated Czech bonds traded in the red
as the Czech currency finally weakened on
Friday. Hence, the yield curve flattened a bit
as the market raised expectations for a rate
hike. Trading activity, however, was quite
soft ahead of the weekend.
While positive news from the domestic
political front will hardly affect today’s
trading, developments in core bond markets
and the Czech FX market will be decisive.
Since bearish sentiment remains in place in
the EMU bond market and as the koruna
could still be under modest downward
pressure, the risk is for more losses on
Czech bonds, too.
Apart from the slightly weaker opening for
longer maturities (in what was pretty much a
delayed reaction to the Hungarian rating
downgrade), Friday’s session was basically
eventless.
(CSOB - Investment research)