CZECHIA: CNB Governor Guides Towards Rate Pause
- CNB Governor Aleš Michl told Bloomberg that he expects the Bank Board to keep the two-week repo rate unchanged for 'some time' in order to prevent an inflation flare-up. In his view, Czechia needs to keep its monetary policy tighter than the eurozone's and real interest rates need to stay positive. The official added that koruna appreciation has helped keep inflation near the +2.0% Y/Y target this year. Michl's comments came after the CNB said on the latest CPI print that 'inflation is not yet stabilised and requires a cautious monetary policy approach.'
- Prime Minister Petr Fiala said that his ODS party and its coalition partner STAN both want the governing coalition to continue, following their talks last night. The leaders of the two parties met to address tensions over the bitcoin scandal and the way it has been handled. STAN leader Vít Rakušan welcomed Fiala's offer to speak with the party's parliamentary caucus before a possible no-confidence vote threatened by the main opposition ANO party.
- President Petr Pavel reiterated that there is no need for the entire cabinet to resign just a few months before elections, adding that he would likely receive an early notification if STAN decided to pull its support for the government.
- The Chamber of Deputies holds an extraordinary meeting today and opposition MPs have been using the session to voice their concerns about the bitcoin scandal.
- The cabinet holds its weekly meeting, with a debate of the annual Monetary Policy Report on the agenda.
- The Finance Ministry is looking to CZK2.0bn worth of 2038 floating-rate bonds.
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EGBS: Citi Like 20-Year RFGB/Bund Tighteners
Late on Friday Citi noted that they “prefer EGB longs via 20-Year RFGB/Bund tighteners given the underperformance of FAN vs. the periphery in the recent tariff de-escalation rally and of the 20-Year Finnish sector on EGB curves due to supply indigestion, which we believe has peaked”.
US 10YR FUTURE TECHS: (M5) Bear Cycle Extension
- RES 4: 112-20+ High May 1 and a bull trigger
- RES 3: 112-01+ High May 2
- RES 2: 111-22 High May 7 and a key near-term resistance
- RES 1: 111-08 20-day EMA
- PRICE: 110-07+ @ 08:48 BST May 12
- SUP 1: 110-01+/00 76.4% of the Apr 11 - May 1 bull leg
- SUP 2: 109-08 Low Apr 24 and key support
- SUP 3: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 4: 108-21 Low Feb 19
Treasury futures are trading sharply lower today as the reversal that started May 1, extends. The next support to watch is 110-01+, a Fibonacci retracement point. Clearance of this level would strengthen a bearish theme and expose a key support at 109-08, the Apr 24 low. Key near-term resistance has been defined at 111-22, the May 7 high. A break of this level is required to signal a potential reversal.
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