Goldman Sachs Cautions On Prospects For Further Peripheral Tightening

Goldman Sachs do not expect “further peripheral compression from current levels.”

• “BTPs have outperformed their beta to vol, and both BTPs and Bonos trade below similarly-rated (non-financial) corporate credit.”
• “More broadly, while we do like relative longs in Europe vs the US, it is not clear that if that view materialises it should translate into tighter sovereign spreads from here.”
• “Indeed, the path for the US policy rate remains an important determinant of global credit risk appetite, and EU-US divergence may also be catalysed by developments that are less friendly to sovereign spreads, such as increasing growth risks.”