freelogoOur objective is to provide English speaking readers interested in Hungary with a well balanced view of political activities in Hungary by featuring contents from various printed and online sources together with our own commentaries. We are convinced that Hungary is built on all sorts of different ideas, thoughts and opinions and, despite of the new Media Law, our aim is to provide an alternative and reliable source of information – contrary to the one-sided press of the government – for those who want to hear the voice of a free Hungary.

Yields on 5 and, 10 years government bonds jump above 10%

Pressure grew on Hungary to change its policies to satisfy international lenders on Tuesday after bond yields jumped above 10 percent and the European Commission told the government to safeguard the central bank's independence.

Investors fear the government's refusal to meet EU and IMF demands could derail a hoped-for financing deal, leading to a full-blown market crisis.
Yields on 5-year and 10-year bonds rose to around 10.40 percent, the highest since June 2009 in illiquid trade, up about 50 basis points on the day before retreating slightly in afternoon trade. The ruling Fidesz party pushed through a controversial central bank law in parliament last week despite EU requests to withdraw it, and Prime Minister Viktor Orbán looks to be sticking to his government's unorthodox economic policies. The government denied a news report on Tuesday which said it was considering tapping part of the central bank's foreign currency reserves to fund economic stimulus. But the government did not address another point in the report suggesting reserves could be used to repay local government debt.
The new central bank law is part of a campaign by Orban's Fidesz government to strengthen its influence over media and public institutions that has prompted protests from business, investors and the EU. "In our view, there is only one reason for the escalation in the sell-off in the Hungarian markets and that is the increasingly erratic communication from the Hungarian government," Danske Bank said. "The Hungarian government's rhetoric has become increasingly hostile towards international investors, the EU, the IMF, rating agencies and the country's own central bank. Unsurprisingly, this is scaring international investors."
The IMF and EU cut short informal discussions with Hungary last month due to objections over the central bank legislation. Orban had refused an EU request to withdraw the bill, saying he would not take orders from Brussels. Informal talks with the International Monetary Fund are expected to resume on Jan. 11 in Washington but it is not clear when formal negotiations about a new credit line could start. European Commission President José Manuel Barroso has stressed the importance of safeguarding the independence of the central bank, the EU's executive said on Tuesday.
"Mr Orbán and the president have exchanged many letters during the Christmas holidays and last week, and the Commission president stressed that this principle of independence for the central bank must be safeguarded," the spokesman told journalists at a regular press conference. "Finally, we received a translation of the law this morning. We are now going to analyse it and check to see whether this new law is compatible with (European) community law," he said.
Fidesz amended the law before it was passed to comply with most of the European Central Bank's requests but left two contentious parts intact. These are the expansion of the Monetary Council and the nomination of a new deputy governor, likened by current Governor András Simor to the post of "political commissar". Analysts said the moves could increase the government's influence over central bank policies.
While Orbán is seeking a funding deal, he does not want lenders interfering with his policies, which included special taxes on banks and a renationalization of pension assets. He told HírTV last month that Hungary would "stay on its feet" even if there was no agreement reached with the IMF.
Financial markets have started to price in the risk there will not be a funding deal. The forint traded at 320 to the euro on Wednesday, above its all-time low at 317.90, and the cost of insuring Hungary's debt against default rose to 630 bps, according to Markit. The debt agency sold 3-month treasury bills on Tuesday at an auction but the yield rose 24 basis points to 7.67 percent from last week.
Hungary was forced to seek a bailout from the IMF and EU in October 2008 when local debt markets froze up. Traders said market had not yet reached the same state. "The situation is not like it was in 2008, but the market is kind of struggling," a fixed income trader said. "And this all is purely due to our (worsened) assessment by investors."
Source: Reuters

Last Updated on Friday, 30 August 2013 09:11



Written on 21/12/2017, 21:09 by admin
jerusalemJerusalem, the eternal capital of the state of Israel and the Jewish people, finally got the official recognition which was overdue for decades....
Written on 13/09/2017, 20:13 by admin
guest-post-eu-and-orban-two-good-friendsThe decision of the European Court of Justice, according to which Hungary should accomodate more than one thousand refugees is at the same time appaling...
Written on 06/10/2016, 19:58 by admin
guest-post-the-day-after-the-referendumThe much anticipated referendum about the resettlement of migrants in Hungary was declared invalid, however, those who voted overwhelmingly rejected the...
Written on 23/06/2016, 06:31 by admin
disintegration-or-something-else-gyurcsany-s-solutions-to-the-ills-of-western-democracies  Something has gone wrong. Quietly, but ever more noticeably, more and more people in more and more places are in revolt. In the American...
Written on 06/04/2016, 19:20 by admin
how-germany-and-its-leftist-liberal-supporters-killed-solidaritySolidarity. This is the word that is probably is the most used and misused term in European politics. Its original meaning is supposed to mean to show...
Written on 23/03/2016, 20:30 by admin
the-orban-regime-can-only-end-in-failure  Change in the Orbán regime is only possible in the event of its downfall, so ruling Fidesz either becomes successful with its current set of...
Written on 23/03/2016, 20:20 by admin
anger-or-resignation  No matter how hard Mr Orbán is trying to get rid of his old cronies, he just cannot get rid of himself. He is too old for his system. The...
Written on 14/01/2016, 20:51 by admin
europe-s-new-yearThe European continent had a very difficult year in 2015, but that may be dwarfed by 2016. The most heated issue will be, without a doubt, the migration...
Written on 09/12/2015, 14:16 by admin
the-secret-diaries-of-viktor-orban-nov-dec-2015November 14th 2015I awoke to the shocking news about the Paris attacks last night. Words cannot express my feelings of shock.It turns out that one of the...
Written on 12/11/2015, 14:31 by admin
spies-in-the-newsroom   According to a new scheme, the government might place spies in the newsrooms, to have a better view of what is being written. This all...
Joomla templates by Joomlashine