French yields plummet post-elections

Yields of the French money markets are trading deep into the red territory at the beginning of the week in response to Macron’s win at the first round of the presidential elections in France on Sunday.

Centrist and pro-EU candidate Emmanuel Macron won with nearly 25% of the votes vs. far-right candidate Marine Le Pen, with over 21% of the votes. However, both candidates will face each other again at the second round on May 7, although consensus this time continues to favour Macron by around 60%-40%.

The yield gap between the French 10-year reference and its German peer dropped by around 20 pts since Friday (63 pts vs. 44 pts as of writing) in the wake of the results, reflecting increasing optimism on a potential Macron win next week and some relief following Le Pen’s performance.