The Czech fixed-income market closed in
a bullish steepening mode last week as
investors felt more assured that the Czech
central bank will leave its repo rate on hold
this week. Hence, the market partly
extended its gains on dovish comments of
CNB’s Bank Board member J. Frait, while
another positive stimulus brought Reuters’
poll, which showed that 22 from 24
interviewed analysts expect the CNB to
leave the official interest rate unchanged this
Thursday.
Today, both domestic and external calendar
is empty so the domestic market will
probably stay in a wait-and-see mode ahead
of two crucial central banks meetings – the
Fed on Wednesday and CNB on Thursday.
As we don’t expect the CNB to deliver a rate
hike this week, there is still room for a
positive correction (drop in yields) at the
short end of the curve, because a smaller
part of the market continues to bet on the 25
bps rate hike.
(CSOB - Investment research)