BNP on Cash Spreads
BNP's strats view local cash as attractive for swap hedgers. We noted the vol last week in swap spreads (net widening) but recent trends still have credit spreads against swaps +40bps over spreads against bunds. Basis on CDS remains negative (iTraxx was +1bp last week vs. €IG cash +2) & that's adding to BNP's view for favouring cash here. In $ markets we've seen relatively consensus swap spread widening play out to some extent - 10yr breaking the -36 level last week - majority of notes that have crossed our desk post treasury refunding are still holding onto a widening view.