European Equities Outperform US Counterparts

OAT/Bund Spreads Show Calm Despite French Elections

Both the EUR and European Equities saw decent outperformance against their US counterparts yesterday. The OAT/Bund spreads showed some calm yesterday with the spread falling 4 basis points from 0.76% to 0.72%. With the French snap elections coming up on Sunday, markets have already priced in a fair bit of risk premium on the fiscal side. Arguably, the potential negative impact from a hung parliament (assuming Macron doesn’t step down) or a far-right majority victory might already be reflected in spreads.

Looking at the broader picture, European equities have been showing resilience in the face of economic uncertainty and geopolitical tensions. The European Central Bank’s accommodative monetary policy stance has also provided some support to the markets. However, concerns about inflation and the speed of economic recovery still linger.

Impact on Me

As an individual investor, the performance of European equities and the EUR can have an impact on my investment portfolio. If European equities continue to outperform their US counterparts, it might present investment opportunities in European companies. However, it’s important to closely monitor geopolitical events like the French elections and their potential impact on the markets.

Impact on the World

The performance of European equities and the EUR has global implications, as Europe is a major economic powerhouse and trade partner for many countries around the world. Any significant shifts in European markets can have ripple effects on the global economy, impacting trade flows, currency exchange rates, and investor sentiment.

Conclusion

Overall, the outperformance of European equities and the relative calm in OAT/Bund spreads indicate a certain level of market confidence despite looming uncertainties. As investors, it’s important to stay informed and adapt to changing market conditions to make informed decisions.