This website uses cookies in order to improve user experience. If you close this box or continue browsing, we will assume that you are happy with this. For more information about the cookies we use or to find out how you can disable cookies, see our Cookies Notice.

Chart of the week

French election with big market impact

Markets have reacted with relief after the results of the first round of the French presidential election were published. Our chart of the week shows how the evolving probability of a Le Pen victory, as derived from bookmakers' quotes, has impacted the risk premia for French sovereign bonds (derived from the yield spread of French bonds over their German counterparts) in recent weeks.

When markets opened on Monday morning, declining risk premia led to rising prices in many markets, for example equities. Meanwhile classic safe-haven investments like gold or the Japanese yen lost in value. The extent of the move in several markets suggests that some investors have been caught on the wrong foot, and were forced to close positions meant to hedge portfolios in the case of an adverse outcome. We would therefore caution against reading too much into the initial market reaction: there is still the second round of voting to come, and several more elections in France and elsewhere thereafter.

Spread France over Germany vs. Le Pen victory probability

Sources: Bloomberg Finance L.P., Deutsche Asset Management Investment GmbH; as of: 4/25/17

Related Articles

May 24, 2018 New Macro Outlook

Italy's new coalition

Italian political turmoil might prove less worrisome than many think.

May 24, 2018 New Equity

Americas CIO View

Oil near normal, Energy profits still below, but limited upside

May 18, 2018 New Chart of the week

Chart of the week

Even U.S. corporations fear the impact of Donald Trump's trade politics

May 09, 2018

Americas CIO View

Neither higher wages, oil, nor federal funds rates threaten margins

May 03, 2018 Focus Topic

Rising interest rates

Will rates unrattle equity markets?

May 03, 2018 Investment Traffic Lights

Investment traffic lights

Our tactical and strategic view

Apr 30, 2018 Equity

Americas CIO View

Volatility: Be contrarian short-term, but respect it longer-term

Apr 27, 2018 Chart of the week

Chart of the week

U.S. bond yields leave German yields further behind. Is the dollar following suit?

Apr 24, 2018 Equity

Americas CIO View

Sizing up Banks and Tech

Apr 17, 2018 Multi Asset

Managing volatility

The markets' increased volatility should be manageable.

Apr 17, 2018 Letter to Investors

One more year

Markets are shaky, but a bear market is unlikely without recession.

Apr 17, 2018 Forecasts

Our forecasts

All forecasts at a glance

Apr 16, 2018 Fixed Income

Pockets of opportunity

We continue to see opportunities, especially in high yield. Buy the dips.

Apr 16, 2018 Equity

Hold your nerve

Based on our growth and interest-rate forecasts, we remain bullish on stocks.

Apr 16, 2018 Equity

Americas CIO View

Economic EPS growth: Does any region have it this cycle?

Apr 11, 2018 Equity

Americas CIO View

Welcome earnings season: 1Q S&P EPS growth likely 20%+

Apr 03, 2018 Investment Traffic Lights

Investment traffic lights

Our tactical and strategic view

Mar 19, 2018 Multi Asset

Normality for volatility

Goldilocks economy showing cracks, volatility on the rise – but not too sharply.

Feedback

Please let us know what you think about this article/page.