ABN AMRO: French Bond Selloff Unlikely to Spread Across Europe

The strategist's argument rests on a relative-value signal: French and German CDS widening is modest and sits well below Italian levels from the 2018 episode, suggesting markets are pricing idiosyncratic political risk rather than a systemic eurozone event. That distinction matters most for peripheral sovereigns and bank balance sheets, which historically absorb contagion first. The open question is whether that CDS gap stays contained if French fiscal politics deteriorate further — the calm is currently evidenced by spreads, not by any resolution of the underlying driver.