Barclays recommends switch to 10-yr bunds

Barclays Capital is forecasting a re-opening of the gap between sterling and euro short rates that w...

Barclays Capital is forecasting a re-opening of the gap between sterling and euro short rates that will lead to bunds outperforming gilts. It believes that the 10-year gilt-bund spread will widen to up to 50 basis points over the coming 12 months, a significant decoupling driven by British euroscepticism. The forecast follows a Barclays Capital poll, which confirmed that the British public remains opposed to the euro, an entrenched attitude that will be difficult to change over the next five years. Mark Capleton, gilt strategist at Barclays Capital, said: 'Each month we'll be incorpor...