UBP says French OAT-Bund spread widening weighs on European assets

• UBP flagged easing US rate-hike fears as weak payrolls cut the implied odds of an October Fed move from 70% to below 20%.
• Treasuries hit multi-year highs before retracing; the US 10-year touched 5.34% intraweek, the 30-year reached 5.69%.
• Europe underperformed as France drove spread stress; the 10-year OAT-Bund spread widened to 150 bps from 85 bps in early September.
• UBP kept zero direct French government debt exposure in euro mandates, citing limited political will to address deficits and debt.
• FX pressure stayed on the euro; EUR/USD slipped to just above 1.12, EUR/CHF fell below 0.93 as spreads widened.

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