French Bonds Still Have Room to Rise: Morgan Stanley Suggests Waiting for 3 Basis Points of Excess Returns Before Considering Shorts

Deep News02-02 16:00

Strategists at Morgan Stanley stated that French government bonds (OATs) still have potential for further gains before reaching a selling threshold. "In the eurozone government bond market, we advise waiting for OATs to generate an additional 3 basis points of excess returns before recommending a cross-market short position on OATs," they noted in a report. From a trading perspective, Morgan Stanley currently maintains a neutral stance on OATs and indicated they would consider initiating a cross-market short position if the valuation advantage shown by their model falls below 5 basis points. According to data from London Stock Exchange Group, the yield spread between 10-year French OATs and German Bunds closed at 58 basis points last Friday.

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