CE Fixed Income: Poland Most Value, Hungary To Converge

Polish long-end treasuries hold the most value among Central European fixed income, in light of the Polish government's commitment to long-term fiscal sustainability. Indeed, we continue to expect Prime Minister Donald Tusk (Civic Platform party) to remain in power following October's parliamentary election and forecast the government will be able to rein in the fiscal deficit to 6.9% of GDP this year, from 7.8% in 2010. The 10-year bond yield has continued its downward move, coming in at 5.79% at one point on June 30, bolstering our target for a move to the 5.60% resistance level. Additionally, we continue to

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