Citigroup: Appointment of French Prime Minister has little impact on French bonds

On September 6, Citi rate strategist Aman Bansal said in a report that the appointment of Barnier as French Prime Minister has little impact on French government bonds, as the upcoming budget is a key test of France’s fiscal resilience before the rating assessment. He said the yield spread between 10-year US Treasuries and German Bunds narrowed by less than 1 basis point on the day, indicating ‘market caution.’ The key reason for the lack of optimism may be that the new government needs the support of the far-right National Rally and centrist parties to gain the trust of parliament. This may mean that government stability is at risk and reflects some far-right priorities in the new government’s policies.