Hungary's new government added to sovereign-debt fears on Friday, shaking global financial markets after a spokesman for Prime Minister was quoted as warning that the economy had been left in a "grave situation" and that talk of a default wasn't "an exaggeration."
The remarks put added pressure on European banks with exposure to Hungary, while serving to undercut overall risk sentiment. Hungary is in danger of a Greek-style scenario.

The comments made over on Friday are highly concerning as they not only increase fears in the markets over a possible Hungarian default, but also clearly demonstrate that the Hungarian government has very little understanding of how the financial markets actually work.
The remarks, meanwhile, contributed to a sharp fall by the euro versus major rivals, driving the single currency to a four-year low versus the dollar and an all-time low against the Swiss franc. A disappointing U.S. nonfarm payrolls figure was seen as the primary driver in the euro's fall versus the dollar. 

Both the Bank of England and the European Central Bank to unveil their latest interest-rate decision in the coming week.
The spokesman said the economy's plight was the result of the previous government's (the Socialist Government) having "manipulated" figures and "lied" about the economy. A committee is set to report on the state of the country's finances over the weekend, which will be followed within 72 hours by a government action plan, the spokesman said. In Greece, they also falsified data as they did in Hungary.
The use of the word "default" and the sharp criticism of the previous government for going to the International Monetary Fund will fuel speculation "as to whether the Hungarian government wants to renege on the country's standby agreement with the IMF and EU.
The Hungarian government in 2008 received a 20 billion euro ($24.1 billion) rescue package from the IMF, World Bank and EU.
The remarks unsurprisingly have also stoked fears of a debt default or a restructuring, to the detriment of European banks.
These developments are important because the losses on the Hungarian debt will likely be shouldered by European banks that are already about to be hit [with] a second wave of [write-downs]. This, in turn, means that financial intermediation generally and globally will take another hit.
The cost of insuring Hungarian government debt default jumped in the credit-default swaps market. The CDS spread widened from 314 basis points to 400, which means it would cost $400,000 a year to insure $10 million of Hungarian debt against default. The cost of insuring debt issued by euro-zone countries also jumped.
As mentioned in the earlier post, there are many big problems in line to come and we (all the developing economies) will pay the value of being a part of this Globalization. 
At the end, I would suggest the traders to trade very cautiously in the markets by maintaining Strict Stop Losses and Booking Nominal Profits and the investors to exit their holdings in profit and avoid making fresh investments at this point of time in the markets. Investors should also go only for those stocks for the purpose of investment, which are bottoming out and will outperform the markets.

At the same time, investors and traders should also be prepared for the expected sharp correction in the Markets in the coming couple of weeks.