You can file the charts shown above away in the “extremely useful information to have at your disposal” folder and we would be willing to bet you’ll find yourself referring back to them sooner or later.
“Some or all the references to prevailing downside risks to the outlook, to the possibility of further rate cuts or to larger asset purchases may be taken out, the sources said.”
“Following the first-round outcome, the Le Pen camp have claimed that the second round of the election will represent a choice between Mr. Macron’s pro-globalisation agenda and their candidates more protectionist stance. Ms. Le Pen proposes the cancellation of existing free-trade agreements and opposes future ones.”
“Despite the 16 weeks of inflows into EM debt, positioning is not that extreme, as investors have been reducing risk in last few days ahead of binary events. Market participants agree that valuations are stretched but carry seems to be the only game in town.”
“The blow-out personal performance of Mr Melenchon with almost 20% is very similar to the Le Pen vote in the desperation of broad areas of the country – the rural areas who feel abandoned, the suburbs where law and order are in short supply, the South exposed to poorly integrated immigrants.”
The final tally was Macron 23.75%, Le Pen 21.53% and to say markets are relieved
“200-DMA at 45bps could limit further spread compression as oversold conditions warrant corrective unwind.”
So at least for Monday, the verdict is already in on European stocks and how
“While today should be a good one for the euro and risky assets, the party may be short-lived; it won’t take long before market focus swings back to the United States and a potential government shutdown at the end of the week.”
Were you looking for more coverage on the outcome of the first round of France’s
Centrist Macron, far-Right Le Pen advance in what should be a market-friendly outcome.
Up, up and away…
“Following a “disruptive†election outcome, however, the market may expect a more accommodative tone from the ECB, and the Riksbank is likely to announce an extension of its QE programme that is due to end in June.”
“That’s because it’s the first time I’ve seen it, sir.”
Earlier we noted that the ECB is prepared to step in with emergency liquidity in
“If there should be problems for specific French banks liquidity-wise, then the ECB has the … ELA, Emergency Liquidity Assistance, but we don’t expect of course any special movements.”
After a one-week holiday hiatus, Goldman’s David Kostin and crew are back with their weekly
Whatever you do, make sure you keep in mind that the world’s worst market timer (the government) just cried “Uncle.†The proper trade is to assume they will make a mess. A big one.
It’s probably safe to say we’ve reached something that approximates “peak” French election analysis on Wall
“If markets turn more negative on the possibility of deposit flights out of the French banking system or on Italian BTPs and banks, the currency can fall more in the absence of a decisive response from the ECB. But, if the ECB were to show a strong hand in the market, buying sovereign debt, this perception could change.”
Right, so put on your hedges folks, we’re heading into a risky weekend. As you’re
“But however sanguine your base case is for the outcome, the shock risks are real here and now, as well as from what any of the outcomes will imply.”
“Melenchon now has a genuine chance of reaching the second round and, in purely markets terms, he would be as bad, if not worse, for French and European assets. Crucially, polls suggest that if Emmanuel Macron stumbles, the leftist would beat both Le Pen and Francois Fillon in a second-round runoff.”
Let’s start with oil real quick, because there are some notable headlines on Thursday morning.
“Not long ago we were often asked why our 2.5% end-March 2017 forecast for 10-year US Treasury yields was so low. Now, the most recurrent questions are how much further can bond yields fall, and what will it take to bring them back to the top of the Q1 range by end-June.”
Are you confused by the French elections? Well, we all are to varying degrees. Indeed
“Imagine you are the parent of a boy — a teenager. Policemen come to your home in the middle of the night and take your boy away. He is held without explanation for weeks. And when he finally comes home, your boy has all the marks of having been tortured.”
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