The Czech yield curve flattened in a
bearish way as the front end of the curve
went up by 6 bps yesterday. Rising rate hike
expectations ahead of CNB’s meeting next,
US PPI figures and probably some kind of
pre-positioning ahead today’s 3Y
government bond auction could the blame.
Regarding the auction, we believe that the
MinFin will be able to sell the whole amount
(CZK 7 bn), though we do not expect strong
bids today.
As concerns other events, the market will
only pass a release of the June retail sales
figures (7.3% y/y) and the main focus will be
on the US inflation figures and Fed’s
Chairman testimony this afternoon. These
two events will define sentiment in core bond
in emerging markets for couple of next
days.
(CSOB - Investment research)