The Czech bond market just partly tracked the bullish move in core bond markets on Friday afternoon

The Czech bond market just partly tracked the bullish move in core bond markets on Friday afternoon as it closes earlier. Interestingly, the Czech MinFin presented a new financing strategy for the year 2007. While the state plans to increase average duration of the domestic debt, it also wants to smooth its maturity profile. It implies that the MinFin is ready to issue new 5Y, 10Y and 15 benchmarks next year. At the same time favourable financing conditions in domestic market allow to leave the options for foreign financing widely open, so the Ministry’s plans suggest it can issue foreign Eurobonds in a range between 0 to 80 CZK bn.

Regarding today’s trading: given the empty calendar the long end of the curve will probably try to catch Friday’s positive action on core markets. On the other hand, a drop in yields at the short end of the curve can be limited due to a weaker koruna.

(CSOB - Investment research)