Signs that the European Commission (EC) is willing to be more lenient in its discussions with Hungary over a new IMF/EU financing programme suggest that an agreement could be reached more quickly than we had originally anticipated. However, we would caution that there remain significant sticking points that have yet to be overcome – not least the conditionality attached to any programme. With this in mind, we fear that today’s rally in the forint and Hungarian bonds may be built on flimsy foundations.
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