Amundi Sees Dip-Buying Opportunity in French Bonds and Equities

 Key Points

• French government bonds are attracting dip buyers after yields spiked on renewed political uncertainty.

• The 10-year OAT yield touched 3.55% this week, the highest since March, narrowing the gap with Italian bonds.

• The spread vs. German Bunds briefly widened to 82 bps before easing back to ~79 bps.

• Amundi CIO Vincent Mortier says spreads are now at levels that “attract marginal buyers,” helping to stabilize the market.

Market Context

The volatility was triggered by Prime Minister Francois Bayrou’s surprise call for a confidence vote on Sept. 8, forcing him to seek either far-right abstentions or a highly unlikely alignment of leftist lawmakers. Political instability has weighed heavily on French assets since last June’s snap elections produced a hung parliament.

• Bonds: Investors are reassessing valuations, with yields now at attractive entry points.

• Equities: The CAC 40 Index has fallen 3.6% over the past year, underperforming the Stoxx 600 (+5%). Mortier views the recent selloff in parts of the equity market as “too sharp,” creating selective buying opportunities.

Investor Takeaway

• Fixed Income: Elevated spreads present a tactical entry point for investors comfortable with political risk.

• Equities: Relative valuations now price in much of the political uncertainty, opening the door for contrarian positioning in French stocks.

Amundi’s stance signals that despite political noise, France’s fundamental strengths and fiscal capacity remain intact, providing a cushion for medium-term investors.a