Australian Retirement Trust Buys French Bonds as Yields Reach 5%
Australian Retirement Trust, Australia’s second-largest pension fund, began buying 10-year French government bonds in September and increased purchases during October’s sell-off, Bloomberg reports. Senior portfolio manager Jimmy Louca said the fund sees market concerns about France’s public finances and possible ECB rate rises as overstated; yields reached 5%, their highest since 2002.
Bottom line — The fund increased its French bond purchases as yields reached 5%, betting that market fears have gone too far.
Go deeper 5
-
Bloomberg reports that the fund started buying when French 10-year yields rose above 4.5% in September.
-
Bloomberg links the October sell-off to concerns about France’s fiscal credibility and political instability.
-
Hedgeweek, citing a Bloomberg report, says hedge funds unwinding leveraged trades added to selling pressure.
-
Fidelity International’s Marion Le Morhedec said hedge-fund activity may account for around half of recent moves in the French-German yield spread.
-
Hedgeweek reports that the spread between French and German 10-year yields reached 154 basis points, its widest since 2011.