- 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
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