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Analysts at Barclays have been long 3Y.........>

EGBS
EGBS: Analysts at Barclays have been long 3Y Italian asset swaps as a carry
trade after the ECB meeting but have closed this trade this morning. Instead,
they are "initiating short 10Y Italy vs Spain" after a 45bp tightening of the
spread since the summer. "Economic fundamentals still appear solid in Spain in a
more structural way than in Italy and we think the political risk premium has
room to increase relatively more in the latter in coming months"
- In terms of spreads "with 10y France vs Germany now trading at its tightest
levels since the start of QE when optimism was very high, we also recommend
rolling our short 10y Netherlands vs OIS trade idea into a short 10y France vs
OIS trade as the risk/reward is better".
- Barclays point out that in France, net issuance will be almost double PSPP
buying levels next year, "which is the least market-friendly among major
issuers"

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