Czech bonds develop a sideways trading pattern yesterday. The market now nervously awaits Thursday’s CNB meeting, since some investors bet on a 25 bps rate hike. We still think that these rate hike hopes/fears are not well founded since we believe that CNB has still room to stay on hold not just this week but couple of months.
While the bond market will be watching a development in the euro-zone (especially after a release of the German IFO index), the bonds will also monitor a development in Slovakia as the NBH has interest-rate setting meeting today. An eventual hike could have some spill over effects to the Czech market, since it could provide some support for the Czech currency.
(CSOB - Investment research)