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EGBS: BTP Spreads Unwind Yesterday’s France-led Widening

EGBS
BulletEurozoneFixed Income BulletsMarkets

10-year EGB spreads to Bunds have tightened through the session, unwinding a portion of yesterday’s sharp OAT-led widening. 

  • French paper usurpingly lags, with political uncertainty set to remain prevalent into year-end. The OAT/Bund spread is 1bp tighter today at 85bps.
  • The BTP/Bund spread has fully unwound yesterday’s widening though, down almost 4bps today at 124bps.
  • The relative political stability in Italy compared to France has supported BTP outperformance over OATs since the French snap legislative elections were announced in early June. 10-year BTP/OAT spread has extended multi-decade lows through November and now trades below 40bps.
  • Alongside the ongoing risk of Government collapse, S&P are due to review France’s sovereign rating on Friday, which presents a further potential headwind for OATs.

 

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10-year EGB spreads to Bunds have tightened through the session, unwinding a portion of yesterday’s sharp OAT-led widening. 

  • French paper usurpingly lags, with political uncertainty set to remain prevalent into year-end. The OAT/Bund spread is 1bp tighter today at 85bps.
  • The BTP/Bund spread has fully unwound yesterday’s widening though, down almost 4bps today at 124bps.
  • The relative political stability in Italy compared to France has supported BTP outperformance over OATs since the French snap legislative elections were announced in early June. 10-year BTP/OAT spread has extended multi-decade lows through November and now trades below 40bps.
  • Alongside the ongoing risk of Government collapse, S&P are due to review France’s sovereign rating on Friday, which presents a further potential headwind for OATs.