Romanian Bonds Drop as Tax Hikes Push Inflation to Two-Year High

Romaniandomestic government bonds extended their decline after inflation accelerated to the fastest pace in two years on government measures designed to curb the budget deficit.

The yield on the 10-year sovereign notes jumped 6 basis points to 7.71%, rising for a fourth day and hitting the highest level since the mid-May selloff around the country’s presidential election.

“The inflation numbers exceeded consensus by a large margin and that is negative for bonds,” said Ciprian Dascalu, a Bucharest-based economist at Erste Group Bank AG. “We anticipate inflation will peak in September and believe there is a meaningful probability that ...