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)
Download

DISCLAIMER: This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead. This report is marketing communication and not investment research and is intended for professional and eligible clients only.