Morgan Stanley Sees Potential in French Government Bonds

Morgan Stanley strategists have indicated that French government bonds still have room to outperform the broader market, according to Jin10. They suggest that it is not yet time to consider selling these bonds. The strategists stated, "Among eurozone government bonds, we are waiting for French bonds to outperform by another 3 basis points before recommending a cross-market short." From a trading perspective, Morgan Stanley currently maintains a neutral stance on French government bonds. They mentioned that if their model shows the cheapness of these bonds falling below 5 basis points, they would consider initiating a cross-market short. According to LSEG data, the yield spread between 10-year French and German government bonds closed at 58 basis points last Friday.