KBC on Hungary’s flattening yield curve
Analysts from KBC Group, the owners of Hungary-based K&H Bank branches and frequent deniers of an exit from the country, have released some macroeconomic analysis while wondering “Is this the end of bearish flattening of the Hungarian fixed-income yield curve?”
KBC analysts note that said curve “has flattened substantially in the last week. The whole yield curve moved upward, but the weakening [of the forint against the euro] more greatly affected the short end of the curve than the long end of the curve.”
Among the findings and forecasts revealed in the report are the following.
● Another base rate cut by the National Bank of Hungary (MNB) is not expected by KBC to emerge from the February 18 meeting.
● The MNB can be patient, according to the analysts, with the forint exchange rate at between HUF 310 and HUF 315 to the euro; the inflation target of 3% set by the central government should be met.
● In terms of stability, Hungary appears less sensitive to exterior conditions as compared to 2008 in particular.
● With relaxed market sentiment, good demand at the next Debt Management Agency (ÁKK) auction of treasury bills should be healthy.
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