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Natixis Highlight Preferred Hedges Based On French Political Uncertainty

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Natixis’ baseline French political scenario consists of “a relative far right majority, but with limited room for more fiscal stimulus which limits the potential for wider spreads.”

  • They go on to run through relative EGB betas, with BTPs deemed the most likely to struggle alongside any OAT weakness.
  • Their preferred trades to hedge against the risk of further OAT widening are:
  • Long 10-Year Bono vs. OATs & BTsP
  • OAT 10-/30-Year flattener
  • Long 10-Year RAGBs or DSLs vs. OATs
  • Long 10-Year EU vs. OATs
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Natixis’ baseline French political scenario consists of “a relative far right majority, but with limited room for more fiscal stimulus which limits the potential for wider spreads.”

  • They go on to run through relative EGB betas, with BTPs deemed the most likely to struggle alongside any OAT weakness.
  • Their preferred trades to hedge against the risk of further OAT widening are:
  • Long 10-Year Bono vs. OATs & BTsP
  • OAT 10-/30-Year flattener
  • Long 10-Year RAGBs or DSLs vs. OATs
  • Long 10-Year EU vs. OATs