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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CZECHIA
- On Wednesday, the CNB raised its benchmark rate by 25bps (as expected) to 0.5% and announced the start of a tightening cycle in order to curb the inflationary pressures.
- With the FRA 18Mx21M trading a 141bps above the Pribor 3M, the forward rate curve is currently pricing in another 5 to 6 rate hikes by the end of 2022.
- However, while central banks have been preparing for a tightening cycle, the uncertainty over the economic recovery remains elevated (i.e. Delta variant, contraction of Chinese liquidity), which could be one of the main factors behind the recent fall in long term bond yields globally.
- This chart shows that after peaking at 1.32% in December 2020, Czech 2Y10Y yield curve has been constantly flattening in the past 6 months, and currently trading at 75bps.
- Can the CNB pause in 2022 if inflationary pressures remain elevated but the economic uncertainty continues to surge?
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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