Hungary's Debt Management Agency: The decline in long-term government bond yields is more than halfway through, with euro convergence providing a buffer

(1) The head of Hungary's debt management agency, Tardos, stated that the decline in long-term domestic bond yields in Hungary is about halfway complete, mainly driven by the country's plan to converge with the eurozone. (2) After Prime Minister Orbán won the April election and announced his intention to join the eurozone, the yield on Hungary’s 10-year forint bonds once dropped more than 2 percentage points from the March peak. (3) Tardos pointed out that convergence towards the euro helps cushion the shocks from international bond market uncertainties—such volatility typically deals a disproportionate blow to small emerging markets; even if global turbulence raises costs in core markets, Hungary's convergence process could still be accompanied by a significant decline in yields.