FxWirePro: Goldman Sachs recommends shorting French bond futures

US investment bank Goldman Sachs has a recommendation ahead of the French election to be held on 23rd April as the support for both far-right and far-left candidates grow. The latest poll shows that the leftist candidate Jean-Luc-Mélenchon is set to secure the third position in the upcoming French election beating Francois Fillon to the place.

Left with the rise in support for anti-establishment candidates, Goldman Sachs has recommended to investors to go short in French bond futures expiring in June. The report said, "We recommend going tactically short June French futures at 147-72, for an initial target of 144.00, and stops on a close above 150.00". They said at a victory by either of the centrists, Francois Fillon or Emmanuel Macron would see the French government bond yield spread over Germany fall whereas a win for either anti-establishment parties headed by Marine Le Pen and Jean-Luc Mélenchon respectively would see the gap increasing.

The French 10-year bond is currently trading at 0.92 percent yield, which is almost 72 basis points more than the equivalent German counterpart.