Euro Rates Watch – Can Macron deliver?

by: Nick Kounis , Kim Liu , Aline Schuiling

  • Mr Macron wins second round by a wider margin than polls suggested
  • The outcome increases the likelihood of a majority in the Assemblée Nationale
  • However, this is certainly not a done deal and there are a number of obstacles which may prevent Mr Macron from implementing his agenda
  • The 10y OAT-DBR spread tightened to around 45bps in the run up to the second round, signalling that the market had fully priced in a Macron victory…
  • … which is even a bit lower than our forecast of 50bps
  • We expect bond yields to move higher, further spread compression is limited…
  • … as investors will worry about the ECB’s QE taper and the Italian elections
Euro-Rates-Watch-Can-Macron-deliver.docx.pdf (215 KB)

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