‘Blowout' in French borrowing costs still to come amid economic deadlock, veteran investor says

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“Political paralysis in France is economic paralysis in France,” David Roche told CNBC.

French borrowing costs will spike over those of Germany"when it comes home that actually political paralysis in France is economic paralysis in France," Quantum Strategy President David Roche told CNBC on Tuesday.

Bond yields move inversely to prices and represent the change in borrowing costs for a government — also indicating long-term investor confidence in the economy.

In a Sunday note, Roche recommended shorting French government bonds versus German bonds. A short is a bet that an asset price will fall. "Eventually that will come home to roost with the euro. And frankly, in a comparison between Italy and France, Italy will look like an angel, though angels they are not, and France will look like the devils," he continued.

"All of the big projects which need funding at the community level will not get the funding at the community level, and I'm talking about enlargement, I'm talking about green projects, I'm talking about rebuilding Ukraine. There are about seven major pillars, they suddenly will go absolutely nowhere, which is disastrous for Europe," Roche told CNBC.

 

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'Blowout' in French borrowing costs still to come amid economic deadlock, veteran investor says'Political paralysis in France is economic paralysis in France,' David Roche told CNBC.
Source: CNBC - 🏆 12. / 72 Read more »