Euro -Zone Bond delivers stable; France dented by downgrade

Euro Zone returns from the government bonds reached a steady start on Monday, whereby the French debts lagged behind after credit ratings agency Fitch Fitch reduced the long-term rating of France on Friday, while the country is struggling with a slowing economy and ballooning debt.

This week is full of macro -risk events, including rate decisions of the American Federal Reserve, the Bank of England and the Bank of Japan, all of which can help shape the hunger of investors for the debts of the euro zone.

French 10-year-old banknotes rose 1 basic point for a yield of 3,516%, compared to a slight dip in the German lifts of the benchmark to 2.708%. The premium investors demand to possess French, rather than German bonds, traded on Monday above 80 BPS, after they rose in the past month of around 65 racials, because a vulnerable French government was on their way to last week’s trust voice.
President Emmanuel Macron mentioned the loyalist Sebastien Lecornu last week as the fifth Prime Minister of France in less than two years, after predecessor Francois Bayrou was overthrown in the parliamentary confidence voice about the enormous unpopular budget of the government.

Fitch has reduced the rating of France with one notch on Friday to A+ late.

“Our most important care for France comes from the upcoming assessment actions of Moody’s and/or S&P. Currently, Moody’s and S&P both have France as AA,” said Jefferies-Strateg Mohit Kumar. “If political uncertainty lingers, there is a risk of at least one downgrade. If France falls under two or more rating agencies, we can see some forced selling of institutional accounts. We remain negative about France spreads.” The European Central Bank left the eurozone rates unchanged last week, as expected, and reduced its inflation projections in the longer term.

In an interview with the Financial Times that was published on Monday, the newly named Austrian Central Bank -Governor Martin Kocher said that the ECB was probably on or very close, until the end of the relaxation cycle, a representation of the markets of the derivatives of the euro zone.

In addition to the series of policy decisions in the central bank, there are a large number of new debts on the market this week. Germany, France, Spain, Slovakia, Greece and Finland keep all auctions, for a total of 28 billion euros ($ 32.81 billion) in delivery, according to the estimates of the Commerzbank. ($ 1 = 0.8533 euros) (reporting by Amanda Cooper; adaptation by Christina Fincher)