France, Paramount Show Rising Bond Risks: Market Anaylsis

This really is a global story about the bond selloff. We're seeing it once again here in Europe. Yesterday we saw Germany acting as a bit of a haven. That seems to be the story here in Europe again this morning. Where are you seeing havens more globally. Yeah. Hi. Good morning Anna. And I do think that's really an interesting point and one that we haven't really seen before. You know, something changed yesterday in the bond market. And all of a sudden treasuries, which have been treated more as a risk asset in some ways, uh, along with Japanese government bonds, suddenly started to outperform. You saw those sort of haven flows, people pouring money into the Swiss franc as well, looking, um, for German bonuses, you say, as a as a haven. And what we're seeing here is, uh, that sort of bond, uh, market starting to fragment and split out into riskier parts and less risky parts. Um, and which I think is really interesting development before we had all yields rising all at one together. Now that we've got those risk, people are worried about France, they're worried about the political situation, that they're worried about the budget. And we saw contagion. We saw it spill into it today. We saw it split into Belgium, for example, in the bond space, Two people are worried about credit markets, too. Worried about the supply. They're worried about indigestion. They're worried about the risky of, uh, sales that are coming to the market, too. They're demanding a premium. Spreads are widening as well. The white House, I think in six months now. And all of a sudden, you know, things have changed just that little bit where some of the bond flows are going into more haven assets. We spoke to some Japanese money managers over here talking about France, for example. Uh, one of them said it had liquidated all of its holdings, put them into treasuries and Japanese government bonds. Others were saying there's no way that they will buy them. Some said 150 basis points on the spread. Okay, we'll take that. But until then, you know, uh, not a lot of appetite for it over here in Asia. Germany yields down this morning French yields up this morning 145 is the spread right now. What rescues France Paul. Is France the victim here is this part of the kind of the bigger story or is it idiosyncratic. Just I just don't know what the mix is between it being a kind of France problem and a France being just the victim of a wider, complete shift in the bond markets that we're seeing globally. Yeah, well, I think the market will probably the weakest spots, first rate guys. So, uh, France is being seen as that right now. People are worried about, uh, managing to the debt load and worried about what the politics is going to look like next year. I don't know what you get as a circuit breaker. You need the government to sort of project some sort of, ah, certainty that is going to deal with, uh, the debt. You need Europe to be coming together and standing firm as well. Um, as one block, I guess. Um, and, Julia, broadly, you need to drop in oil prices or something like that to help the bond market as a whole. What do you mean watching for when it comes to nonfarm payrolls, the forecast is for what, about 90,000? It was a big number in August. The whisper number is closer to 80,000. Uh, Paul, what few will be will be potentially market moving if anything from from NFP. Well, we'll know what I think the the there's a risk here, Tom, because the market is very much expecting a slowdown in the jobs data. Uh, and October is not priced for a hike. The next one that anybody's looking for is December. So there is that risk. If we have a really big blowout number again, that would catch people by surprise. And again, uh, put the emphasis on the fed to raise rates more rapidly.