Yesterday CNB’s decision to leave its key
policy rate unchanged (see the News
section) calmed down rate hike
expectations, which had been intensifying
before the central bank board meeting.
Hence, as one would expect the central
bank neutral policy action triggered a
positive price action, which was
characterized by a bullish steepening of the
yield curve as for instance the yield on twoyear
bonds dropped by around 5 bps. On
the other hand, the long end of the curve
was only little changed, despite a rebound in
the EMU bond market.
Today, the domestic market will be digesting
an outcome of yesterday FOMC meeting.
Less hawkish-than –expected FED might
positively influence both core bond markets
and Czech koruna. This should be (at least
in early trading) provide bullish stimuli for the
domestic bonds, which might extend its
gains today.
(CSOB - investment research)