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European peripherals under severe pressure — #SaxoStrats
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French-German yield spreads have blown out to the widest level since 2002, but where do they go from here, asks Simon Fasdal, Saxo Bank’s head of fixed income trading.
Monday saw a significant rally in 10-year German bunds, but French, Portuguese and Italian government bonds are under pressure.
Fasdal says that investors should be aware of panic spreading to other markets such as equities.
Concern remains over the shorter end of yield curve such as Portuguese 2- or 3-year bonds, he adds.