French Bond Spread Bouncing Off Support May Spark Widening
- Difference in yield over Germany eyes retracement levels
- Dutch election reaction fades near support at 59 basis points
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Investors are fading the narrowing spread between the yields on France and Germany, which may spur an attempt to test retracement levels from the narrowing trend seen since the last week of February, chart patterns suggest.
News that Dutch citizens rejected the anti-Islam Freedom Party would find an echo among French voters emboldened bulls to send the spread lower on March 16. However, the spread bounced back from support at 59 basis points to about 66 basis points a day later. With that support having held, bears may have their sights set on Fibonacci retracement levels of the trading range from Feb. 20 to March 3.