Holiday atmosphere prevailed on the Czech
bond market, hence the bonds were only
little affected by weaker-than-expected
payrolls figures.
The delayed reaction might come today, so
the long end of the long end of the curve
may benefit from improved sentiment in core
markets. Looking ahead this week
Wednesday’s release of the June inflation
figures should be decisive. The year-on-year
inflation should drop back below the CNB
mid-term inflation target (3.0%). The
question is how deeply? Should the headline
CPI fall to 2.8%, as we believe the market
might revise its rate-hike expectations, which
might appear too aggressive.
(CSOB - Investment research)