CEEMEA Strategy Notes: The Flow Wonder of Budapest

Research evidence excerpt

CEEMEA Strategy Notes: The Flow Wonder of Budapest

Deutsche Bank

Research

Emerging Europe Emerging Markets Date

Hungary 17 June 2026

CEEMEA Strategy

Notes

The Flow Wonder of Budapest

Christian Wietoska

Since the general election in mid-April, Hungary assets have emerged as a standout

Strategist

in EM. 10Y bonds have rallied by nearly 100bps, and even 250bps from Iran-war +44-20-754-52424

peaks, reaching close to 5.1% – the lowest yields since March 2022 and 30bps lower

than PolGBs for the first time since early 2018. Concurrently, HUF has maintained Oliver Harvey

Macro Strategist

its strong YTD performance, outperforming EUR by 5% since April 12th.

+44-20-754-51947

Remarkably, despite a temporary VaR shock in early March, Hungarian local

markets (FI & FX), alongside Colombia, are the best performing EM fixed income Ankit Jain

markets YTD, returning an impressive 17% (Figure 1). While not a record, Hungary Research Associate

is on track for one of its top three best years for bonds over the past twelve years

(Figure 2).

The rally, driven by attractive bond valuations (including high real yields, risk-

neutral rates, and term-premium following the market-friendly election), is further

amplified by unprecedented foreign inflows. YTD, Hungary has attracted a striking

USD 10.5bn into its local fixed income market, with USD 3.5bn from pre-election

positioning and USD 7bn post-election.

While this total might not seem exceptional in absolute terms, it's significant for

Hungary's relatively small bond market. These YTD inflows represent the largest

annual amount on record by a wide margin, dwarfing the second-highest inflows

of close to USD 3bn in 2022 and 2025 (Figure 3).

Even more strikingly, YTD inflows constitute over 30% of total foreign exposure,