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BONDS

Dip lower, and Tnotes test yesterday's low

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FX OPTION EXPIRY

BOND SUMMARY

EGBs-GILTS: Focus Squarely On ECB

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  • On Tuesday, economic data showed that PPI inflation rose slightly lower than expected by 5.9% YoY in June (vs. 6.1% exp.), up from 5.1% the previous month.
  • As opposed to Poland, which is trying to keep interest rates low in order to stimulate the economic recovery, the CNB has started a tightening cycle last month and is expected to raise its benchmark rate by another 25bps to 0.75% at its next meeting on August 5.
  • CPI inflation has been decelerating slightly in the recent two months and is currently standing below the 3% CNB upper tolerance band.
  • USDCZK ticks lower this morning after finding a local high at 21.86 yesterday; support to watch on the downside stands at 21.68 (200DMA), followed by 21.49 (100DMA). On the topside, first resistance stands at 21.92, followed by 22.
  • Czech 10Y yield has been retracing lower in recent days, breaking below its 50DMA at 1.70% this morning; next support to watch on the downside stands at 1.60%. On the topside, ST resistance to watch stands at 1.78%, followed by 1.80%.