Right, so put on your hedges folks, we’re heading into a risky weekend.

As you’re acutely aware (and acutely tired of hearing about) the first round of the hotly contested French elections is Sunday and as outlined this morning by one former trader, the implications are “big league.”

We got a terrorist attack on Thursday at the Champs-Elysées and as the Telegraph wrote this morning, that “clearly suggests that extremists are seeking to influence the tone of the debate – and perhaps its outcome.”

I’m not sure I’d go that far, but do consider excerpts from the piece that quote is from as it is nevertheless interesting:

The timing just three days before the first round of the french presidential elections and during a prime time TV “debate” between all 11 official candidates clearly suggests that extremists are seeking to influence the tone of the debate – and perhaps its outcome

If that was the aim, it was a success, as two candidates РMarine Le Pen, the far-Right Front National leader, and conservative Fran̤ois Fillon Рcancelled visits on Friday Рthe final day of the campaign.

As they learned of the attack while on air, all the runners adapted their conclusions to pledge to protect the French. “Enough of laxism, enough of naivety,” said Ms Le Pen in hers.

So that’s the geopolitical setup for Sunday.

As far as the economic backdrop, we got some good-ish news there with the release of April PMIs this morning. Here’s the breakdown:

  • France April Flash Manufacturing PMI 55.1; Est 53.1; year ago 48
  • Forecast range from 52.5 to 53.7 from 20 economists
  • Highest reading since April 2011
  • Seventh consecutive month of expansion
  • New Orders rise to 55.6 vs 53.8 in March
  • France April Flash Composite PMI 57.4 Vs 56.8; Est 56.2


That led directly to a 4bps decline in French 10Y yields:


It’s worth noting that France’s composite PMI moved ahead of Germany’s for the first time since 2012:


But lest you should lose track of where the risks are here, do note that headed into the election, OATs are still trading as though France is no longer part of the eurozone “core”:


Ok, anyway, the euro is trying for its biggest weekly gain in three months, helped by rally in the pound and a weaker dollar. “With uncertainty over the French election, people are wary of trading the euro on its own, but were forced to trade when it move against other currencies,” Masashi Murata, a FX strategist at Brown Brothers Harriman in Tokyo told Bloomberg.


Thursday’s shooting in Paris may have forced an early end to campaigning, but it had little effect on FX markets, other than perhaps “weighing on already thin liquidity in options,” Bloomberg goes on to note this morning.

Meanwhile, OPEC jawboning wasn’t enough to save crude from an increasingly bearish (or, as I like to call it, “supply-ish“) fundamental backdrop. Brent’s set for a weekly decline on the order of 5% and had fallen by as much as 11c, to $52.88/bbl by 8:47am in London. WTI was also lower lower, -11c to $50.60.

Asian equities piggybacked on Wall Street’s Thursday gains to close mostly higher while European shares are flat to lower after the Paris shooting and ahead of Sunday.

  • Nikkei up 1% to 18,620.75
  • Topix up 1.1% to 1,488.58
  • Hang Seng Index down 0.06% to 24,042.02
  • Shanghai Composite up 0.03% to 3,173.15
  • Sensex down 0.4% to 29,307.65
  • Australia S&P/ASX 200 up 0.6% to 5,854.14
  • Kospi up 0.7% to 2,165.04
  • FTSE 7111.42 -7.12 -0.10%
  • DAX 12038.49 11.17 0.09%
  • CAC 5053.03 -24.88 -0.49%
  • IBEX 35 10384.80 12.30 0.12%

Here’s the data docket for the US:

  • 9:45am: Markit US Manufacturing PMI, est. 53.8, prior 53.3
  • 9:45am: Markit US Services PMI, est. 53.2, prior 52.8
  • 9:45am: Markit US Composite PMI, prior 53
  • 10am: Existing Home Sales, est. 5.6m, prior 5.48m
  • 10am: Existing Home Sales MoM, est. 2.19%, prior -3.7%

Oh, and in the latest example of the Fed trying their hand at Q&A sessions, “crazy eyez” Kashkari will take questions in St. Paul at 9:30 EST.

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