Looking Through Le Maire’s Latest Pledge To Cut Public Spending

OATs look through this morning’s FT interview with French Finance Minister Le Maire which saw him promise “a renewed push to cut public spending on everything from energy subsidies to real estate tax credits as the government seeks to rebuild its credibility with credit rating agencies.”

• Le Maire went on to note that that the recent rating decision by S&P (when the country avoided a downgrade, as it’s AA; Outlook Negative status was affirmed) “is an incentive to do more and to do better. We need to stick to our debt reduction program and to cut public expenditures.”
• OAT futures have benefited from the light richening observed in core global FI markets in recent trade, but still sit a touch below yesterday’s settlement levels owing to spill over derived from the late NY cheapening in U.S. Tsys.
• Cash OATs run little changed to 1bp cheaper, with the wings of the curve outperforming.
• The 10-Year OAT/Bund spread is little changed on the day, operating around multi-week tights near the 52bp mark.