Natixis: Budget remains a headwind for French debt after Prime Minister's appointment

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Jinshi data on September 6th, French Societe Generale Interest Rate strategist said that in the long run, the appointment of Michel Barnier as the new Prime Minister of France is unlikely to boost French bond prices. The new prime minister will now undertake the challenging task of forming a new government and dealing with thorny public finances, but ‘given the future challenges, we do not expect this news to bring long-term advantages to French bonds,’ strategists said. They expect the yield spread between 10-year US Treasury bonds and German bonds to remain in the range of 60-75 basis points. They said, ‘autumn may be the next period of spread volatility, when discussions on European budget plans and preparations for the US election will take place.’

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