The lower than expected US core PPI
pushed the yields of the Czech longer
maturities down. The short end of the yield
curve was rather stable, even after the
comments by central bank governor Tuma,
who declared that the risks to inflation
forecast are still more or less balanced. Also
other members of the CNB board were
speaking yesterday including rather hawkish
comments by vice governor Niedermayer.
After all it seems to us that there might be
members in the board trying to push through
the rate hike as soon as next week. On the
other hand we believe that decisive should
be the position of the governor, who seems
to prefer to wait till the next inflation forecast
in October.
Today the Czech bonds should more or less
track the development on the core markets.
This should be primarily influenced by
waiting for the Fed’s rate decision and
upcoming comment. Hence we believe
rather in the stability of the yield curve,
possibly in slight decline at the long end.
(CSOB - Investment research)