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OAT: Wider Again, Local Press Outlines Increased Fiscal Pressure For France

OAT
CEEMEAEurozoneFranceBulletGlobalFixed Income BulletsRegionMarkets

10-Year OAT/Bunds widens to 75bp following a source report from Les Echos pointing to even greater fiscal troubles for France.

  • Les Echos sources note that the French MoF is now looking for a deficit of ~6% of GDP in 2024, assuming no further tax measures are enacted.
  • That is more extreme than the 5.6% that had been touted by various reports in recent weeks, with the latest deterioration apparently driven by “local authority spending and poor tax revenues.”
  • The Spain/France/Portugal 10-Year fly that we have been monitoring has moved below -14bp, representing a fresh cycle low.
  • We had previously argued that OAT outperformance was unlikely in the immediate term, while highlighting several reasons for further underperformance.
  • Sovereign rating announcements due after market this evening should underscore the more favourable ratings backdrop and fiscal trajectories for the peripheral nations (and Ireland) when compared to France.
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10-Year OAT/Bunds widens to 75bp following a source report from Les Echos pointing to even greater fiscal troubles for France.

  • Les Echos sources note that the French MoF is now looking for a deficit of ~6% of GDP in 2024, assuming no further tax measures are enacted.
  • That is more extreme than the 5.6% that had been touted by various reports in recent weeks, with the latest deterioration apparently driven by “local authority spending and poor tax revenues.”
  • The Spain/France/Portugal 10-Year fly that we have been monitoring has moved below -14bp, representing a fresh cycle low.
  • We had previously argued that OAT outperformance was unlikely in the immediate term, while highlighting several reasons for further underperformance.
  • Sovereign rating announcements due after market this evening should underscore the more favourable ratings backdrop and fiscal trajectories for the peripheral nations (and Ireland) when compared to France.