Credit Suisse: Left-wing victory may push the French-German bond spread above 80 basis points

Jin10 data on July 8th, according to James Rossi, global head of macro strategy at JPMorgan, the ‘shocking result’ of the left-wing alliance in the parliamentary elections in France may ‘easily’ push the spread of 10-year government bonds above 80 basis points. Last Friday, the spread closed at around 66 basis points. However, he added that further pumping of the spread may be temporary, as the market will have to reassess the composition of the government. ‘Ultimately, a government in a state of uncertainty may cause the spread to hover around 70 basis points. An ineffective government (suspended parliament) and the country’s continuously rising debt risk will definitely not be beneficial for the euro in the coming months.’ JPMorgan maintains a long position on 10-year French government bonds.