A rally on the Czech fixed-income market
continued yesterday as the market with
some delay reacted to Friday’s strong gains
in the core bond markets. The yield curve
shifted downwards in a parallel way as
yields dropped by around 3 bps. Moreover,
even money market rates fell further so the
market actually went further against our
expectations for the official interest rate.
Currently the market sees the next rate hike
in a 4-month horizon, which seems too
optimistic to us.
Given the empty domestic calendar, the
market should focus on the domestic FX
market as further koruna gains are in the
cards. While the koruna should be story for
the short end of the curve, the long end
should pay attention to US releases, since
those could be market-friendly today.
Hungarian government bonds to some
extent tracked the forint early in the session
but mostly failed to revert the losses later in
the session. Only the short end of the yield
curve dropped while the rest of the yield
curve went upwards by around 2-3 basis
points.
Today the economic calendar is again
empty. While the regional sentiment will
remain positive due to the rise of the US
stock market, we foresee rather range
trading at Hungarian FI market ahead of
Thursday’s ECB meeting.
(CSOB - Investment research)