Forint, Hungarian Bonds Rally as Obama Tax Plan Buoys Markets
The forint strengthened the most in three days and the yield on Hungary’s 2015 bonds fell to the lowest this month as President Barack Obama’s plans to extend U.S. tax cuts spurred gains in world markets.
The forint appreciated 0.7 percent to 277.95 per euro at 11:00 a.m. in Budapest, the biggest advance among more than 20 emerging-market currencies tracked by Bloomberg. The yield on the 8 percent bond maturing in February 2015 fell 16 basis points to 8.1 percent. The cost of protecting Hungary’s debt from non-payment with credit default swaps fell to 360.34 basis points from 367.72, according to data from CMA.
“There won’t be a tax increase in the U.S.” and “that’s certainly positive for global sentiment,” Gyorgy Cselenyi, head of interest-rate trading at BNP Paribas SA in Budapest said by phone.
The forint is rebounding from a slump yesterday after Moody’s Investors Service lowered Hungary’s credit rating to one step from junk on concern that the government’s policy of plugging budget holes with “temporary measures” won’t be sustainable.
Obama said he’ll agree to a two-year extension on all Bush- era tax cuts in a compromise deal he called “an essential step on the road to recovery.”
To contact the editor responsible for this story: Gavin Serkin at firstname.lastname@example.org