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Natixis Recommend OLO/Bund Widener

EGBS

Natixis write “Belgian government bonds have been outperforming EGB core & semi-core recently, despite no significant improvement in fundamentals.”

  • “This performance may have been overlooked, strong buying followed the recent OLO auction cancellation.”
  • “The upcoming Fitch review on Belgium (later today) and uncertainties surrounding the Belgian federal election in June pose potential risks, which could impact the credit risk premium for OLOs.”
  • “We think that risk/reward staying long Belgium vs. Germany in that context seems too high ahead of rating & political risks.”
  • “Therefore, we recommend entering a short OLO 10/34 vs. long Bund 02/34 position (entry: 59bp; target: 70bp; stop-loss: 55bp; horizon: 5-months).”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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