Strategists at Citigroup favor buying EU debt against
French peers to fade the former’s underperformance, while
analysts at Natixis prefer a trade which focuses on the
potential for discrepancies on the EU curve.

Citigroup: (strategists including Aman Bansal)
* Recommends buying 30-year EU versus France given the limited
role of the EU in joint borrowing for defense might help reverse
some of the recent underperformance against OATs. Contributions
are seen capped at the €93b of Recovery and Resilience Facility
loans that are yet unrequested

Natixis: (strategists including Benoit Gerard)
* Recommends selling the belly of the EU 5y10y30y fly given the
EU’s borrowing capacity will play a role in spending on new
defense projects, a move likely to be enacted sooner to
accommodate the potential withdrawal of the US; this should
cheapen the 10-year sector of the curve

Santander: (strategists including Adam Dent)
* Recommends buying 30-year UK on 20s30s40s fly given the DMO
should put more weight on ultra-longs within the long sector in
light of the curve shape; the 30-year tenor is now so cheap,
there is an argument for spreading the burden more toward the
wings of that area

JPMorgan: (strategists including Francis Diamond)
* Recommends tactically receiving June 2025 MPC-SONIA given
April will be a big month in revealing the pass-through of the
NIC tax rise which may have a bearing on policy setting from
June onwards and the bank’s expectation for 75bps of further BOE
cuts this year; trade may also be isolated from any trade,
tariff or geopolitical noise

Barclays: (strategists including Rohan Khanna)
* Recommends ECB-dated April-September flattener given money
markets should shift rate cuts down the strip if policymakers
skip a reduction in April; even if they cut in April, bets on
easing in June should build further, while rate-cut premiums in
July and September are not expected to fall to zero; trade also
benefits from the potential for sequential cuts if data and
sentiment deteriorate