US Treasury yields finally eased, yet the dollar gained sharply as investors looked for shelter on rising concerns about European sovereign debt. France’s widening yield spread over Germany raises uncomfortable questions about fiscal sustainability, political uncertainty and the cost of financing its debt.
Higher yields do not automatically make French bonds a bargain: they may simply compensate investors for greater risk. Is France the new Greece? The comparison has limits, but the confidence spiral is familiar. And the implications extend beyond bonds, weighing on the euro and European equities while potentially supporting US assets.
Later today, US payrolls remain a key test. Strong employment and wage growth could revive hawkish Fed expectations, while softer figures could support further Treasury gains, but the long term US yields might be driven by Europe’s sovereign jitters, and the latter could support US bonds and equities in the absence of a big surprise in jobs report.
Watch the full episode to find out more!
1:03 European sovereign debt headaches help slow US bond selloff
2:19 Why French debt issues is bad for broader European markets, and the euro?
6:55 US jobs data in focus
#Markets #France #Eurozone #SovereignDebt #Treasuries #EURUSD #USD #FederalReserve #NFP #Stocks #Swissquote #MarketTalk
