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The very unusual phenomenon of curve inversion has made a return to the US dollar swap market, and its re-appearance is causing quite a stir.

CNB Board expected to leave interest rates unchanged at November sitting. The Governing Board of the Czech National Bank (CNB) will not change its policy at the monetary session on Nov 30, and thus interest rates would remain unchanged with the basic repo at 2.5%, analysts polled by CTK agreed. Factors in favour of stable rates are the favourable inflationary developments with the latest consumer price inflation data being significantly below the CNB projection and target band thanks to oil prices standing at below their long-term average, and the continuing CZK strengthening. On the other hand, CNB might be urged to tighten its monetary stance given the higher interest rates in the euro area, higher consumer spending boosted by the wages growth and the still fast loans expansion. However, analysts expect CNB to increase rates at begining-2007 at the earliest; in 2007 at least two rates’ hikes are expected in response to accelerating inflation resulting from the introduction of higher excise taxes on cigarettes, speeding up domestic demand and credit expansion, as well as due to the big gap with the euro area interest rate levels.

OECD: Robust GDP expansion to slow down, public deficit remains primary risk. According to the OECD’s Economic Outlook , the Czech economy is to continue its robust expansion in the next two years, albeit at decelerating rates. In full-2006 GDP growth is to reach 6.2% y/y increase in real terms, while in 2007 and 2008 it is to gradually slow don to 4.8% y/y and 4.6% y/y, respectively. The strong economic expansion will be mainly fuelled by the accelerating households’ consumption and robust fixed investments; exports will remain important driver of economic growth, but they will be accompanied by increasing imports as well. Meanwhile, the consumer price inflation is to grow from the expected 2.8% y/y in 2006 to 3.4% y/y in 2007 and 3.1% y/y in 2008, with the acceleration in 2007 being direct result from the higher excise taxes on cigarettes in environment of growing demand and higher energy prices, and rents deregulation. At the same time, thanks to robust economic development, the unemployment rate is to continue its declining trend and to reach 6.3% in 2008 from the expected 7.3% in 2006. On the other hand, OECD sees as major challenge and risk to future economic development the public finance stance, thus revising upwards its projection for the public finance deficit in full-2006 by 2.6pps y/y to 3.7% of GDP because of the lower VAT receipts accompanied with increased investment spending. Furthermore, the next two years growing public gaps to 4.1 and 4.3% of GDP will be observed. Among the reasons for the expected gradual increase of the public finance gaps are the planned overshooting of the 2006 budget plan, the abandoned euro adoption plan, as well as the stalled pension, healthcare and labour markets reforms. Overall, OECD projections are close to those of the Czech finance ministry and the central bank.

The cracks in currency parities are starting to show, and it looks like they will widen further. Bernanke’s speech is not quite in line with market perceptions about interest rates.

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One of the first things I was taught when I joined the market was to always be careful about what I said in public.

The phones of top divorce lawyers such as Raymond Tooth and Fiona Shackleton are ringing off the hook.

One of the UK's rudest magazines,Viz, has recruited the services of ex-Barings Securities boss, Peter Norris. The blue-blooded banker has moved to a magazine whose comic strip characters include Sid the Sexist, the Fat Slags and Biffer Bacon, the last of whom spends most of his time doing bodily harm to his parents.

Oyakbank deal may be announced shortly. Oyakbank is in talks with more than one potential investor and a deal may be announced within ten days, an unnamed official from Oyak Group told Reuters. Oyakbank is owned by Oyak, a military pension fund. French Credit Agricole is one of the potential investors interested in Oyakbank, according to Reuters . French daily Les Echos also reported, two weeks ago, that Credit Agricole had made an offer for Oyakbank. Last month, Coskun Ulusoy, general manager of Oyak, said that the company would take a decision regarding the sale of Oyakbank by end-November. Oyak will either sell its entire stake in the bank or form a 50-50 partnership with the potential investor, according to the general manager.

China's GDP growth for 2006 projected at 10%-10.7%. China's National Bureau of Statistics' (NBS) Chief Economist Yao Jingyuan on Saturday forecast that China's GDP will grow between 10% and 10.7% in 2006. This is higher than the forecast made by the World Bank and People's Bank of China. On Nov 14, the World Bank had forecast a growth rate of 10.4%. People's Bank of China has forecast a growth rate of over 10% for 2006.

Bank of Thailand: Strong Baht unlikely to adversely affect economy. According to TNA , Bank of Thailand's Governor Tarisa Watanagase last week said that though the Baht had appreciated by around 12.8% this year, against the US dollar, this would not adversely affect Thailand. While this appreciation would have an effect on exports, the economy is expected to grow steadily because of good growth in the economies of Thailand's trading partners. As a protection against exchange rate fluctuations, Watanagase urged the private sector to improve efficiency and to give due consideration to currency risk management.