Go Long 30Y OAT vs Bund as Political Risk Fades: NatWest Markets
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
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Giles Gale (Royal Bank of Scotland Group PLC)
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UUID: 7947283
(Bloomberg) -- OATs are set to outperform bunds, particularly in 30y, as Le Pen has failed to gain momentum and polls are not close enough to believe Le Pen has a significant chance of victory, write NatWest Markets strategists including Giles Gale in a client note.
- Macron’s position looks increasingly solid, with polls showing greater voter comfort, and with a competent display in this week’s televised debate consolidating him as front- runner
- Italian bonds have been trading at a higher beta than France. With no timeline on elections, recent gains from euro-skeptic parties will escape the market focus
- Banking sector risks are under control, while downsizing of QE buying is still distant enough; recommend extending from long 4y BTP to 7y, and buying 7y BTPei
- Yesterday’s LTRO-II take-up was larger than consensus, but the upside surprise is not sufficient for significant follow through receiving or buying in the 4-5y area; 4s7s peripheral flatteners look a lot more attractive
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Giles Gale (Royal Bank of Scotland Group PLC)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283