Czech 10Y benchmark attracted strong
demand strong as the bid-cover ration
reached 2.4. The result of the 10Y bond
tender obviously helped and yields on the
secondary market moved down right after
the outcome was released. Hence, the yield
of the 10Y benchmark closed the session
2 bps lower. Domestic politics – the failure in
confidence vote - did not play any role in
yesterday’s trading.
Today, ECB meeting and particularly
Trichet’s pres conference will be in center of
attention. While a 25 bps is fully expected
and the next one should be called for
December, we do not expect Trichet should
speak bluntly about whether more rate hikes
should be expected in 2007 in contrast to
some of his colleagues on the governing
council recently. Such comments should not
be threat for the long end of the Czech yield
curve. As concern a development at the
short end - the CZK firming should be a
bullish signal today.
(CSOB - Investment research)