Czech bond yields tracked their German
counterparts lower on Tuesday. This time
the fall of the bond yields was seen across
the whole curve, which shifted downwards
by around 6 bps.. It is worth noting that the
market virtually ignored CNB’s Minutes from
the latest Board meeting.
As concern the Minutes, although it has
been known that the Board's last decision to
keep the repo rate unchanged was
unanimous, they include some interesting
sentences. They contains for instance
slightly hawkish warnings on eventual rise in
inflation expectations or on a widening of the
negative interest rate differential, which
might (negatively) affect the exchange rate
of the Czech koruna Nevertheless in our
view the Board does not seem too vigilant to
be ready to hike already this month as some
market participants think.
Today a release of the June CPI figures
matched the market consensus (2.8% y/y),
thus the bonds should be as well as the
koruna influenced mainly by emerging
markets development.
(CSOB - Investment research)