Hungary’s government bond yields fell to the lowest in seven weeks after Germany’s top constitutional court allowed the country to ratify a euro-area bailout fund with certain conditions.
A second day of gains in 10-year bonds cut the yield eight basis points, or 0.08 percentage point, to 7.304 percent. Hungary’s cost to insure debt for five years with credit default swaps fell two basis points to 381, the lowest in a year on a closing basis, by 4:11 p.m. in Budapest.
Demand for riskier assets in Europe increased after the Federal Constitutional Court today dismissed motions filed by groups including a conservative lawmaker and an opposition political party that sought to block the fund, known as the European Stability Mechanism, and a deficit-control treaty championed by Chancellor Angela Merkel.
The verdict on “the ESM treaty by the German constitutional court has had a positive effect on risk appetite,” Ilan Solot, a London-based strategist at Brown Brothers Harriman, and colleagues wrote in a research report today.
The currency of Hungary, the most indebted eastern member of the European Union, depreciated 0.4 percent to 283.85 per euro, after gaining 1.7 percent in the three previous trading sessions.