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French Bond Auctions Are First Big Test Since Macron's Gambit.
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- Abstract:
France is set to sell bonds for the first time since President Emmanuel Macron called a snap election, causing market turmoil. The Treasury aims to raise up to €10.5 billion through auctions of three- to eight-year bonds. The results of the auctions will indicate whether the recent market selloff has made yields attractive enough for buyers. Some funds are avoiding the securities due to concerns about further losses. The auctions are seen as a major test for market sentiment. The European Commission has reprimanded France for running a budget shortfall that exceeds the bloc's limit. The extra yield investors demand to hold French debt has reached its widest level since 2017. Some investors believe the market rout will eventually create a buying opportunity, but bond spreads need to widen further to entice them back in. The auctions will provide insight into the level of uncertainty in the market. Longer-maturity French bonds have been more popular with buyers this year, while shorter debt has seen slightly weaker demand. The auction results are expected to be announced shortly after the bidding deadline. [Extracted from the article]
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