Semi-core 10s are generally tracking the uptick in Bunds. A reminder that backflows surrounding OAT coupons and redemptions (~EUR48.6bn) will become reinvestable as of Thursday, which will factor into price action later this week.

• OATs have unwound a little over half of their March/April widening vs. Bunds, after avoiding negative ratings action from Fitch & Moody’s in the interim.
• Many still expect some form of negative Franch rating action from S&P next week, which should limit the market impact from that scheduled update, guidance-dependent.
• News that France has mandated banks to launch a new 20-year OATei benchmark had no tangible impact on the space, with the announcement falling in line with MNI’s expectations.

Fig. 1: 10-Year OAT/Bund Spread (%)