Monthly Securities Market Summary
What happened in the securities markets? – 2025 December
Monthly report on government securities markets
2025. December
Domestic government securities market
Year-on-year inflation fell to 3.8% in November, while core inflation remained at 4.1%. Industrial production in October rose by 0.5% compared to the previous month, resulting in a year-on-year decline of 2.7%. Retail sales rose by 3.1% year-on-year, while gross wages increased by 8.7%.
In the first days of December, the forint strengthened to below 381, which had not been seen since January 2024. Fitch downgraded its BBB debt rating outlook to negative, citing primarily fiscal and related economic policy challenges. This means that all three major rating agencies have a negative outlook ahead of the next round of assessments expected in April-May, with S&P at the bottom of the investment category and the other two one notch above. In the week following the announcement, the EURHUF exchange rate rose again to 385, then retreated until speculation about the possibility of a shift to a presidential system of government pushed it back above 385, causing yields to jump as well.
The MNB left its base rate unchanged at 6.5%, but announced a new inflation forecast and modified its guidance to be data-driven, raising the prospect of resuming interest rate cuts amid stable exchange rates and favorable inflation data at the beginning of the year. Auctions of longer-term securities continued to attract strong interest. Secondary market benchmark yields fell by 5-20 basis points during the month. Auction DKJ yields slipped from around 6.20% to close to 6%. The MAX index gained 1.16% and the RMAX index 0.63% in the last month, closing the year with returns of 6.06% and 5.72%, respectively
US and European government bond markets
Discussions on peace terms continued with Ukraine's involvement. As expected, the Fed cut rates by 25 basis points, but there were dissenting votes in both directions. Compared to the two cuts expected by the market for 2026, decision-makers still consider only one cut to be appropriate on average, but the market looked further ahead than the updated forecast and yields fell slightly when the cut was announced. According to Powell, who will chair three more meetings, interest rates have reached a neutral range and further steps will depend on economic developments. The backlog of statistical publications due to the government shutdown will provide a lot of information until the January meeting, although it may be distorted. Although the interest rate-setting committee almost unanimously considers inflation to be higher than desired, Powell did not consider it likely that the Fed would follow other central banks in raising interest rates due to concerns about the weakening labor market.Inflation data was 0.4% weaker than expected, but the average was dragged down by estimates of housing costs due to the government shutdown, so there was no major market reaction. According to the ECB's forecast, after a temporary decline, European inflation will return to the 2% inflation target by 2028, with a slightly stronger service inflation trajectory and slightly higher growth than before. The ECB therefore left its key interest rate unchanged at 2% and will continue to decide on the appropriate interest rate level on a data-dependent basis at each meeting.
Monthly report on stock markets
2025. December
Domestic and Central-Eastern European stock markets
Central European stock markets closed 2025 with strong performance. Czech stocks rose particularly sharply, with the PX index up 7.7%, but the Romanian BET index's 7% and the WIG20 index's 6.1% performance in the last month of the year, calculated in local currency, were also impressive. The Budapest Stock Exchange's leading index, the BUX, rose by 1.4% in December. The banking and insurance sectors also performed strongly, with the WIGBANK index, which comprises Polish banks, rising by 6.1%, although this performance was dwarfed by the more than 36% rise in the shares of Austrian insurance company VIG in December. Macroeconomic analysts are optimistic about regional growth this year, expecting growth to exceed the eurozone rate: they forecast economic growth of 3.5% in Poland, 2.4% in the Czech Republic, 2.3% in Hungary, and 1.4% in Romania in 2026. During the month, the Polish central bank implemented a 25 basis point cut.
Global emerging stock markets
December was a good month overall, and the turbulence in November turned out to be just another correction, with risky assets rising worldwide, led by AI-related stocks. The MSCI Emerging Market Index, which represents developing markets, rose 2.99% in dollar terms, but as the forint strengthened slightly against the greenback, the appreciation was 2.61% in domestic currency terms. Within emerging markets, there were sharp differences between regions. In addition to Taiwan (+5.07%), which is linked to AI, the Korean market (+11.54%), which includes computer memory giants, and the South African stock exchange (+8.52%), which is linked to raw materials, also outperformed. However, the Chinese (-1.88%), Indian (-1.09%) and Indonesian (-1.4%) stock markets continued to underperform, but the Brazilian market lagged behind the most, as it became clear that Bolsonaro would support his own son rather than a market-friendly candidate in the Brazilian presidential election, which the market considers to be the main event of 2026.
Developed stock markets
Following the correction in November, volatility declined in December and the leading indices of the US stock markets rose to near new highs. Among sectors, financials and industrials performed best, supported by robust economic growth, declining risks, and stable consumption. The energy and healthcare sectors, on the other hand, lagged behind, mainly due to low oil prices and regulatory uncertainty. In Europe, the German, French, and Italian indices also recovered from the November correction and approached historic highs. Although industrial activity showed a mixed picture, the outlook improved, especially in Germany. The MSCI World gained 1.44% (1.02% in forints), the S&P500 gained 0.69% (0.28% in forints), the Nasdaq gained 0.11% (a decline of 0.30% in forints), the DAX rose 2.74% (4.10% in forints), the EURO STOXX 50 rose 2.26% (3.61% in forints), the FTSE100 rose 2.27% (4.20% in forints), and the Japanese TOPIX rose by 0.90% (0.75% in forints) in its own currency during the period.
We would like to draw the attention of our esteemed readers and interested parties to the fact that this information contains data that was current and available on the date of its preparation, and does not constitute investment advice.
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