Société Générale: Renewed geopolitical risks continue to pressure eurozone bond spreads, with no sign of seasonal narrowing

(1) Societe Generale interest rate strategists pointed out that, due to renewed geopolitical tensions, the yield spread of eurozone government bonds continues to widen under pressure, and the seasonal narrowing previously anticipated by the market has not materialized. (2) Strategists believe that, as investors expect new bond issuance after the summer and escalating political uncertainty, the market is reluctant to hold long yield spread positions, resulting in the seasonal trend failing. (3) Although the 10-year France-Germany spread may remain range-bound over the summer, weak fundamentals, heavy supply and uncertain demand still require a cautious approach in the medium term; the Italy-Germany spread remains linked to oil prices, and strategists remain optimistic about the investment value of short-term bonds.