Inflation slows, bonds advance with stronger forint

Hungarian bonds rose as the forint extended its rally from a record low, and after a report showed inflation slowed in June, and amid relaxing fears of the central bank’s raise of interest rates. Benchmark Hungarian debt rose with other emerging markets, sending yields down from 2 1/2 year highs, and the forint rose for a fourth day on speculation that the Federal Reserve is nearing the end of its cycle of interest-rate increases. A report showed monthly inflation slowed to 0.3% from 1% in May. “The forint has been rising, which means the need for a rate hike is much more limited,'' said Olivier Desbarres, a strategist at Credit Suisse Group in London. “Bonds are getting some support after many tough weeks, and there's no immediate problem with inflation.'' The yield on Hungary's 5.5% bond due February 2016 fell 14 basis points, to 7.60%, at 5:02 p.m. in Budapest, its lowest in three weeks. Its price, which moves inversely to the yield, rose 0.84, or Ft 84 per Ft 10,000 face amount, to 86.01. (Bloomberg, NG)