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Needle Still Points South


Yields Bounce as Equities Make New Monthly Highs


Heading North


Bull Rally Accelerates


Economists Survey Raises 2021 CPI Forecast To 4.9%

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  • In the past 18 months, we have seen that Czech financials stocks have been significantly more sensitive to ST bond yields than the traditional 'yield curve' .
  • While the rising uncertainty over a range of risk factors (Delta variant, falling Chinese liquidity…) has been pushing the 2Y10Y yield curve lower, the recent 'hawkish' policymakers' tone keep sending Czech short term bond yields higher.
  • A 50bps hike at the September 30 meeting seems very likely following the positive surprise in inflation.
  • Czech CPI inflation came in higher than expected in August and rose to 4.1% YoY (vs. 3.6% exp.), up from 3.4% from the previous month.
  • MSCI Czech financials index broke its 1,171 resistance this week to trade at a its highest level since April 2019. Next level to watch on the topside stands at 1,200.

Source: Bloomberg/MNI