⚡️ LATEST: Sumitomo Mitsui DS reportedly EXITED its entire position in French government bonds, rotating into German Bunds and short-term Japanese debt.
This wasn’t a trim. It was a full exit.
France’s 10-year spread over Germany has reportedly surged past 140 basis points, while 5-year CDS climbed to around 81 bps, signaling sharply higher perceived sovereign credit risk.
The bigger risk is the flow.
Japanese investors still hold roughly ¥25 trillion of French debt. If more capital follows this rotation home, France could be forced to attract buyers with even higher yields just as fiscal concerns are already pressuring its bonds.
Cheap-yen carry trades helped finance higher-yielding assets around the world for years.
Now Japan’s capital coming home could start reversing that trade.
France may be getting an early look at what a broader yen-funded unwind looks like.
@TradingNews
This wasn’t a trim. It was a full exit.
France’s 10-year spread over Germany has reportedly surged past 140 basis points, while 5-year CDS climbed to around 81 bps, signaling sharply higher perceived sovereign credit risk.
The bigger risk is the flow.
Japanese investors still hold roughly ¥25 trillion of French debt. If more capital follows this rotation home, France could be forced to attract buyers with even higher yields just as fiscal concerns are already pressuring its bonds.
Cheap-yen carry trades helped finance higher-yielding assets around the world for years.
Now Japan’s capital coming home could start reversing that trade.
France may be getting an early look at what a broader yen-funded unwind looks like.
@TradingNews