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Local Yield Curve Steeper Following Inflation Print

HUNGARY
Local bond yields trade notably higher following the inflation print this morning which confirmed Hungarian inflation among the highest in the CEEMEA region - and EU more broadly (25.2% y/y). The curve sits higher and flatter (3y +20bps, 10y +12bps), while CEE peers are little changed.
  • Stubbornly high inflation is likely to support the NBH’s patient stance on policy, in turn extending the lifeline of the HUF carry trade. Nevertheless, EURHUF sits close to flat on the day, with recent ranges and nearby technical levels well respected. 372.38 - the Mar 1 low - remains the key support level to watch.
  • The government will this week discuss whether or not to extend food price caps beyond this month. The regular cabinet meeting is scheduled for today, with the inflation data likely to be a contributing factor to their decision.

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