Morgan Stanley: Hungary’s bonds better than Poland’s
Morgan Stanley stated that it prefers Hungary's local-currency government bonds over those of Poland. Poland and Hungary continue to have negative CPI readings while economic growth in both countries is still resilient, it said in a note yesterday.
Given that inflation in these countries is driven by external factors, cutting interest rates to weaken the currency could be one of the options to export deflation, Morgan Stanley said. With forecasting 60 bp and 75 bp rate cuts in Hungary and Poland, respectively, and 30 bp and 65 bp, respectively, priced in by the market, Morgan Stanley prefers Hungarian bonds to Poland's.
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