France bond risk hits Nine-Month high amid fears over government - Bloomberg
France’s new Prime Minister Sebastien Lecornu has resigned just weeks after his appointment, plunging the country into a fresh political crisis. Lecornu, France’s fifth PM in less than two years, had his work cut out to convince the country — and investors — that he could unite a fractious and divided parliament enough to get a 2026 budget over the line. With the prospect of a state budget being passed now in doubt, French markets reacted strongly to the news, with the yield on the 30-year government bond, or OAT, hitting a one-month high of 4.44% before retreating slightly. The yield on the benchmark 10-year bond rose to a 10-day high of 3.599%. Meanwhile, France’s CAC 40 index slumped 2.0% and the euro fell 0.7% against the dollar - CNBC
France is replacing Italy as Europe’s poster child of fiscal woe
Source: Bloomberg
The ECB has tentatively allowed a little bit of price discovery in the bond market
The French government wakes up to discover their cost of funding is higher than L'Oréal's. Source: Hanno Lustig, FT
Bloomberg frames the latest bond rally (with yields falling) in a wider context:
“Three years after a surge in inflation pummeled fixed-income markets all around the world, global bonds have finally re-entered bull market territory. Bloomberg’s Global Aggregate Index, which tracks returns on sovereign and corporate debt across developed and emerging markets, has surged more than 20% from its 2022 trough to its highest level since March 2022 amid a broad fixed-income rally. The latest leg higher came as cooling US labor data fueled bets the Federal Reserve would step up policy easing.” Source: Bloomberg, Mo El Erian on X
Interesting point of view by Otavio Costa on the rise of global yields relative to us yields
He sees it as a real-time “Mar-a-Lago Accord" (i.e dollar devaluation). Here's why: "The strategy of letting global yields rise relative to US yields is central to weakening the dollar. What some see as a market shift might be a policy, a clear move toward dollar devaluation. The implications extend further, especially for emerging markets, which stand to benefit significantly from this environment". Your view? Source: Crescat Capital, Bloomberg
$TLT jumps to highest price since April 📈📈📈 Ready to breakout?
Source: Barchart
As Fed rate cuts odds increase, stocks and bonds continue to be bid together...
Source: www.zerohedge.com, Bloomberg
"The Ukraine war and the weaponization of the dollar was the straw that broke the camel's back"
Source: zerohedge
