While bookmakers’ odds are unchanged for a Le Pen victory, French bond yields have tumbled to one-month lows as the prospect of a centrist alliance in the country’s presidential election eased market anxiety that far-right candidate Marine Le Pen will win.
French yields are down to one-month lows. As The FT notes, the decision on Wednesday by independent candidate François Bayrou not to stand in the country’s elections, and instead throw his support behind fellow centrist Emmanuel Macron, has helped French bonds snap a three-day losing streak.
“Though the polls continue to suggest that a Le Pen victory is unlikely in the second, decisive round, the tone throughout yesterday’s session was clear in that the market does not wish to be proven incorrect, yet again,” said Lyn Graham-Taylor at Rabobank.
And despite the collapse in German yields, the French spread has also reduced notably… though only to 4 days lows…
“It is increasingly debatable, above all in bond/credit market terms, whether there is another story in financial markets other than the French elections and related market fears,” noted Marc Ostwald, a strategist at Admisi.
via http://ift.tt/2kPZjMS Tyler Durden