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French Bond Investors Skeptical That Election Risk Is Over
04-27-2017, 03:57 AM,
#1
French Bond Investors Skeptical That Election Risk Is Over
French Bond Investors Skeptical That Election Risk Is Over

<p>Bond investors are <strong>far from convinced that the risks surrounding the French election are over</strong> despite the broader market exuberance following the outcome of the first round.</p>
<p><strong>French 2Y yields have only corrected about half of the risk premium over German 2Y yields since the election</strong> (and in fact are widening out today)</p>
<p><img height="312" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/21/20170426_france1_0.jpg" width="600" /></p>
<p>&nbsp;</p>
<p>Furthermore, as Bloomberg details, <strong>open interest, a measure of the number of contracts outstanding, has dropped only 10 percent so far this week </strong>even as French government bond futures surged after the race for presidency narrowed to Emmanuel Macron&nbsp;and&nbsp;Marine Le Pen.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/21/20170426_france2_1.jpg"><img height="287" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/21/20170426_france2_1_0.jpg" width="600" /></a></p>
<p>A decline in open interest amid a rally in an asset typically <strong>suggests short-covering rather than new positions being added</strong>... but the modest size of the drop suggests few investors are relieved enough to pile back into 'still cheap' OATs.</p>


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