Tardos, head of Hungary’s Debt Management Office, said the decline in long-term
domestic bond yields is roughly halfway complete, driven by the government’s
push to converge with the euro area. After the prime minister’s April election
win and announcement of euro-entry plans, the 10-year forint government bond
yield has fallen more than 200bps from its March peak. Tardos said euro
convergence will help buffer shocks from an increasingly uncertain global bond
market that tends to hit small emerging markets disproportionately, and that even
if global turmoil raises core market funding costs, the convergence process can
accompanied by substantial yield declines.
