They predict iBoxx non-financial senior corporate bond spreads at 55 basis points by year-end, the iBoxx financials senior index at 65bp, the high yield non-financial index at 380bp and non-financial hybrids at 220bp.

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Societe Generale's rates strategists are becoming more confident about re-entering short positions in Italian BTP-German Bund spreads given recent repricing of European Central Bank rates and inflation.

"We are more confident that a gradual increase in spread volatility should play into further risk aversion by non-domestics and carry players."

The strategists see this as a gradual process, therefore they would enter underweight when the 10-year BTP-Bund yield spread is below 150 basis points. They target an initial move to 170 bps and 190 bps by year end.

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French government bonds seem largely priced for a win by Emmanuel Macron at presidential elections this month, according to Citi's rates strategists Aman Bansal and Antoine Gaveau.

OATs have outperformed eurozone core and semicore peers, but they face asymmetric risks ahead amid Macron's tightening poll support versus Marine Le Pen with around 40% of voters still undecided.

"A Macron win is still our base case, but Le Pen is the clear risk for the market given her poll proximity to Macron," the strategists said. In the case of a Le Pen win, Citi's strategists expect the 10-year OAT-Bund spread to widen by 20 basis points.

Commodities:

Oil prices dropped below $100 a barrel ahead of a reported meeting of International Energy Agency members at which they are expected to discuss new oil releases. The IEA will hold an emergency meeting on Friday to discuss new oil releases to ease rising prices, Reuters reports.

The meeting would come a day after the U.S. said it would release 1 million barrels a day from its strategic stockpiles for up to six months. While greeted with some skepticism, the release should bridge the gap until new supply comes from either Iranian negotiations making progress or OPEC+ catching up with its quotas, said SPI Asset Management.

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Brent crude prices have less upside potential as the U.S. releases its oil reserves, Goldman Sachs said, now expecting prices to reach $125/bbl in 2H versus its earlier $135/bbl forecast.

Other bearish factors include a likely delay in the ramp-up of Iranian oil exports to 3Q given the slow progress in reaching an agreement as well as a hit to Chinese crude demand due to its lockdowns, although the oil market still remains in an overall deficit, Goldman Sachs said. It also expects OPEC+ to stick with its scheduled oil-production quota increases through 3Q.

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European natural-gas prices slipped as trader nervousness about Russian President Vladimir Putin's threat to cut exports eased. Mr. Putin said in an interview broadcast Thursday that Moscow would halt gas deliveries to "unfriendly states" unless they switched to payment by rubles by Friday.

The policy has caused a standoff with Germany, a key importer of Russian gas, which is refusing to pay by ruble.

Analysts said flows of Russian gas to Europe were steady Friday, helping to keep a lid on prices. Benchmark European gas futures edged down 0.8% to 124.95 euros, equivalent to $138.26, a megawatt-hour.


EMEA HEADLINES

Eurozone Inflation Hits Record High as Ukraine War Drives Up Energy Costs

The eurozone's annual rate of inflation rose further in March, beating forecasts and marking the highest print in history.

Consumer prices rose 7.5% on year in March after climbing 5.9% in February, according to a first estimate released Friday by Eurostat, the European Union's statistics agency. Economists polled by The Wall Street Journal forecast eurozone inflation at 6.9% in March.


Russia's Manufacturing Activity Shrinks as Sanctions Over Ukraine Bite

Russia's factories cut production and jobs in March after the U.S. and its allies adopted some of the most severe economic sanctions ever taken against a country following Moscow's invasion of Ukraine, a new survey showed on Friday.

The survey of purchasing managers at Russian manufacturing companies conducted by data firm S&P Global also recorded sharp rises in prices and a big decline in new orders. Western sanctions have effectively severed Russia from international finance and barred it from importing key technologies


Bollore Agrees to $6.3 Bln Sale of Africa Logistics Assets to MSC

Bollore SE said late Thursday that it agreed to sell its Africa transport and logistics assets to privately-owned container-ship operator MSC Group for an enterprise value of 5.7 billion euros ($6.31 billion).

The sale of Bollore Africa Logistics is expected to be completed by the end of the first quarter of 2023, subject to regulatory and competition approvals, the Paris-based company said.


Sodexo Shares Slump After Guiding to Lower End of 2022 Target

Shares in Sodexo SA fell on Friday after it said it backed its full-year outlook but would only meet the lower end of its targeted range.

Shares at 0810 GMT were down 6.5% at 69.04 euros ($76.40).


Sanofi's Euroapi to List in Paris on May 6

Sanofi SA said Friday that its spun-off business Euroapi will begin trading on May 6 following approval by the French market regulator.

The French drugmaker will continue to hold around 30% of shares in the active-pharmaceutical-ingredients business following the listing, while the French state will acquire a stake of 12% via sovereign fund EPIC Bpifrance. The remainder will be distributed via a dividend in kind in addition to the proposed cash dividend set out last month, Sanofi said, with one Euroapi share given for every 23 Sanofi shares held.


Deutsche Bank Must Face Lawsuits Alleging It Enabled Ponzi Scheme

Judges in New York and Miami ruled that investor lawsuits could advance against Germany's Deutsche Bank AG for allegedly ignoring warnings that it was helping finance a real-estate-linked Ponzi scheme.

Cayman Islands liquidators won rulings Tuesday and Wednesday in separate lawsuits in Florida and New York alleging that Deutsche Bank helped facilitate a wide-ranging fraud by Biscayne Capital International LLC, an investment advisory firm.


Ukraine Strikes Russian Military Depot, Russians Say

KYIV, Ukraine-Ukrainian attack helicopters executed a low-flying predawn raid on Russian territory Friday, a Russian official said, eluding air defenses to strike an oil depot and signaling Kyiv's ability to broaden the field of the war.

Security-camera footage released by Russian state-owned media channel RIA Novosti appeared to show several missiles firing at the depot and igniting explosions. Vyacheslav Gladkov, the regional governor of Belgorod, wrote on social media that two Ukrainian helicopters carried out the operation while flying at low altitude.


Behind the Front Lines, Russia's Military Struggles to Supply Its Forces

Russia's army has suffered serious losses as it has battled fierce Ukrainian resistance. Behind the front lines, a less visible failure in supplying and maintaining the troops in the field has critically hobbled Moscow's invasion plans, according to Western intelligence assessments.

Russia's weaknesses in logistics-the tail of support and services that enable combat forces to live, move, communicate and fight-were evident just days after the invasion was launched on Feb. 24. They have continued weeks into the campaign, according to Western officials and private military analysts.


Russia Hands Control of Chernobyl Back to Ukraine, Officials Say

Russian forces transferred control of the Chernobyl nuclear power plant back to Ukrainian authorities, according to the International Atomic Energy Agency, the Ukrainian state nuclear company Energoatom and plant workers-who said the departing troops also had taken more than 100 Ukrainian national guardsmen away in trucks as prisoners of war.

The Russian troops began leaving in phases on Tuesday, and the entire Russian deployment had left the area by late Thursday. That concluded a five-week occupation of the defunct plant that began on the first afternoon of the Feb. 24 invasion of Ukraine, when Russian troops arrived at the plant, the site of the world's worst nuclear accident.


France's Macron Under Fire for Hiring McKinsey for Covid Vaccine Rollout

PARIS-Scrutiny of the French government's spending on private consultants during the vaccine rollout has thrown President Emmanuel Macron on the defensive as his bid for re-election approaches its final week.

The French Senate released a report earlier this month detailing how the government spent EUR893.9 million, equivalent to $993 million, last year on consultants, including McKinsey & Co., to help French officials navigate the pandemic and other challenges. That was a sizable increase on the EUR379.1 million spent in 2018, Mr. Macron's first full year in power, the report said.


GLOBAL NEWS

March Jobs Report Could Reveal Strong Hiring Momentum

U.S. employment growth continued at a solid clip in March, economists say, amid an easing pandemic and signs that more Americans are returning to the labor force.

Economists surveyed by The Wall Street Journal estimate that employers added 490,000 jobs in March. That would mark 11 straight monthly gains above 400,000, the longest such stretch of growth in records dating back to 1939.


Car Sales Seen Sputtering as Supply-Chain Woes Hurt Production

Auto makers are expected to report weak vehicle sales for the quarter as chip shortages and supply-chain issues continue to limit vehicle production.

Sales of new vehicles are projected to fall 16% in the first quarter from the year-ago period and represent the second-worst quarterly total in a decade, behind the pandemic-affected second quarter of 2020, according to Cox Automotive.


China Caixin Manufacturing PMI Falls to Lowest Level in Over Two Years

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04-01-22 0625ET