OI Points To Fresh CAC 40 Longs On Monday, Less Conclusive For OATs

Monday’s move lower in OAT futures and OI change point to net long cover in the contract.

• Wider weakness in core global FI markets factored in after the initial, limited relief rally as the first round of the French elections avoided the worst-case scenarios for markets. This came after a fresh round of net short setting in futures on Friday, which saw OI jump by ~9%.
• We also note that Bund/OAT spread movement points to cover of wideners, a theme that was likely mirrored in early futures trade.
• Meanwhile, the combination of yesterday’s uptick in CAC 40 index futures and open interest data point to net long setting.
• Short cover also likely factored into the move after a fairly notable round of net short setting on Friday. To recap, Friday saw OI in the contract jump by ~15K contracts (~8%).
• Today’s weakness in the CAC 40 underscores the political uncertainty that France faces, with the index trading back towards last week’s multi-month low.
• Focus is now on candidate declaration deadlines for the second round of voting, with the ‘republican front’ seeking to minimise RN gains.