CZK: Koruna Treads Water, EUR/CZK Stays Below 25.0
Feb-26 10:35
EUR/CZK last deals +0.009 at 24.939 and a return above the 25.0 figure could be a stepping stone for a further recovery. Conversely, bears look for a clean break below 24.918, the 61.8% retracement of the Jun - Aug 2024 upleg.
- The CNB expected EUR/CZK to average at 25.2 in 1Q25 and 2Q25, according to the Winter Forecast. Separately, Deputy Governor Zamrazilova said last month that in the absence of geopolitical shocks, EUR/CZK should stay around 25.0.
- CZGB yields have ticked lower across the curve ahead of today's bond auction. The Finance Ministry offers for sale CZK15bn of bonds maturing in 2028, 2032 and 2035.
- The PX Index has added 0.7%, returning above the 2,000 mark as a result.
- The local data calendar is empty until the scheduled release of flash Q4 GDP on Friday.
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GILTS: Supported By Broader Risk Off, Supply Eyed Later In The Week
Jan-27 10:34
Gilts are off session highs, with global inputs dominating thus far.
- Core global FI markets rallied as Chinese tech firm DeepSeek’s AI advances generated questions surrounding U.S. tech dominance, as well as promoting worry surrounding the high levels of planned and already deployed capex in microchips.
- Futures +48 at 92.39 last, compared to session highs of 99.60.
- Yields 2-5bp lower, 10s outperform.
- Bulls have been unable to force meaningful breaks of last week’s yield lows.
- Spread to Bunds 0.5bp wider at 206.5bp.
- BoE-dated OIS price 70bp of cuts through year-end after showing ~71.5bp at one point this morning. Last week’s dovish extreme of ~72.5bp over that horizon intact.
- We still look for cuts in February (market prices 22.5bp of cuts over that horizon) and May (~42bp of cumulative cuts showing through that meeting).
- SONIA futures flat to +6.5. SFIM6-U7 have breached last week’s highs.
- Supply provides the highlights of this week’s limited UK calendar.
- The DMO is looking to hold a tender of a sub-5-Year gilt on Thursday. We believe that the 0.125% Jan-26 gilt is the most likely candidate for issuance via that tender and pencil in a GBP1.0-2.0bln size for the transaction (greater colour surrounding our thoughts can be found in an earlier bullet).
US TSY OPTIONS: 10Yr Weekly Option
Jan-27 10:32
10yr Weekly Option, Expiry Friday:
- TY 110c, bought for '06 in 15k.
GERMAN T-BILL AUCTION RESULTS: 11-Month Bubills
Jan-27 10:32
| Type | 11-month bubill |
| Maturity | Dec 10, 2025 |
| Allotted | E1.951bln |
| Previous | E1.51075bln |
| Total sold | E2bln |
| Target | E2bln |
| Avg yield | 2.309% |
| Previous | 2.223% |
| Bid-to-cover | 3.69x |
| Previous | 2.6x |
| Bid-to-offer | 3.6x |
| Previous | 1.96x |
| Previous date | Dec 02, 2024 |
