Earlier today we noted the “big league” compression in the all-important OAT-bund spread, the market’s preferred gauge of French political risk and thus, a go-to measure of EMU breakup risk.
Here’s the 10Y spread:
And the 2Y spread:
Finally, here’s Bloomberg’s technical analyst Sejul Gokal on why this matters:
OAT Futures and ‘Le Spread’ Euphoria May Risk Fading at 200-DMA
Notable moves in OAT market have sent futures and France-Germany 10-year yield spread near key equilibrium levels that may drive tactical reversal in post-French vote reaction, Bloomberg technical analyst Sejul Gokal writes.
- 9-day RSI tests multi-mo. highs at ~81
- 200-DMA at 45bps could limit further spread compression as oversold conditions warrant corrective unwind
******
Props to Sejul on the title there….
lol: “OAT Futures and ‘Le Spread’”
— Walter White (@heisenbergrpt) April 24, 2017
Leave A Comment