Tactical buying opportunities in European debt
TLT•Nuveen strategist Laura Cooper sees tactical buying opportunities in Spanish and Italian debt after the selloff pushed borrowing costs higher, while staying away from French debt and rotating somewhat away from German debt.
1. Opportunities beyond France
Laura Cooper, Nuveen’s head of macro credit and global investment strategist, said contagion from the French debt selloff had created short-term opportunities elsewhere in euro zone bond markets. France’s 10-year yield rose 10 basis points in October after jumping 43 basis points in September.
2. Italy and Spain
Italy’s 10-year borrowing costs rose 47 basis points in September and Spain’s rose 36 basis points. Cooper said Spain remained attractive and Italy was of interest because spreads had widened meaningfully. She said Nuveen had maintained a structural underweight in France for 18 months to two years because it expects the political risk premium to remain, and was rotating somewhat away from German debt after recent demand for it.
