Hungary Bond Bulls Bet on Euro as Inflation Target Cuts
Hungarian bond yields have outperformed regional peers as investors bet on the new government euro adoption goals. The central bank lowered its inflation target to 2.5 percent, boosting foreign inflows.
Hungary lowered its inflation target to 2.5% from 3% on Tuesday, signaling a clear path toward euro adoption and driving local bond yields below peers like Poland and Romania during the morning session. The benchmark 10-year bond currently trades at a yield of 5.64%, outpacing regional returns as foreign inflows surge. Overseas investors poured $13.5B into local debt this year.
The National Bank of Hungary's policy shift follows the April election victory of Prime Minister Peter Magyar's administration, which ended Viktor Orban's 16-year rule. Foreign holdings of forint-denominated bonds reached their highest level since 2019, with the debt agency AKK reporting foreign participation at 34% by the end of August.
