OAT: Commerzbank Maintain Underweight Stance
Jul-17 08:51
Commerzbank note that “Bayrou's latest plans for budget consolidation including significant spending cuts and the elimination of two public holidays are sinking in. OAT spreads are little changed. The plans are ambitious and would probably be sufficient to reduce next year's deficit to the planned 4.6%, but execution risks are high”.
- They suggest that “parliamentary approval of the budget seems highly unlikely, which could trigger a potentially successful vote of no-confidence. As the right-wing RN may support a no-confidence vote against Bayrou this time, we see significant political risks arising form the fiscal challenges and prefer OAT underweights, particularly vs. BTPs”.
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Of note:
EURUSD 1.8bn at 1.1600/1.1625.
EURUSD 2.24bn at 1.1500 (wed).
USDCAD 1.38bn at 1.3600 (wed).
EURUSD 1.88bn at 1.1600 (thu).
AUDUSD 1.1bn at 0.6600 (thu).
- EURUSD: 1.1500 (233mln), 1.1525 (233mln), 1.1600 (446mln), 1.1625 (1.36bn).
- USDCAD: 1.3620 (350mln).
