In this week’s Alpha Bites, I recommend closing the cross-country rates trade to pay Poland 5y against receiving Czech 5y rate, a recommendation I made in July.
I had recommended the trade because the Polish central bank was behind the curve in addressing accelerating inflation, which it is attempting to correct now by hiking aggressively.
With the Czech central bank having been hawkish and ahead of the curve, the rate differential between the two is narrowing as rates in Poland rise.
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