2017 French elections: watch the CDS – Credit Default Swaps!

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Hedge funds have a new friend >>> French CDS…

CFRTR1U5 Curncy (FRANCE CDS USD 2017-02-06 18-30-29

In the past weeks, French Credit default Swaps have risen from 30 to 49.

They even moved slightly up after’s Fillon’s mea culpa today.

Nothing alarming yet. Portuguese CDS stand at 295, France at 49.

For non-Bloomberg users, to keep and eye on France CDS click here >>> Boursorama

However, if hedge funds continue to buy/play CDS to “hedge” against the risk that Marine Le Pen is elected in May 2017, French yields will inevitably move north.

This would result in some French Govt bond forced selling, European rates contagion (funny enough, the EU works well when their is market contagion……) and finally overall market volatility. As a result, I would highly suggest that one should pay attention closely to this issue.

Reminder: hedge funds love dancing around political events #BREXIT #TRUMP…

Germany next?

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Safe investing,

Loïc Schmid

 

 

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