Sunday, April 29, 2012

Hedge funds bet against eurozone

(Financial Times) -- Hedge fund managers make for unlikely supporters of Fran├žois Hollande, the French socialist presidential candidate.

But it is Mr Hollande's potential victory in the coming second round of the French elections, and with it a sharp deterioration in sentiment surrounding France's creditworthiness in the bond market, that many hedge funds are now anticipating.

Indeed, their bets against the bonds of "core" eurozone countries -- not just France, but Germany and the Netherlands too -- represent a new, deeper level of bearishness on the single currency area's prospects.

The European Central Bank's longer-term refinancing operation provided a huge shot in the arm to banks and markets in the first quarter of the year and triggered a huge rally in credit. But its impact is now being questioned by growing numbers of hedge funds. Read More