(BFM Bourse) – The yield on the 10-year French bond increases but does not soar this Monday, while political uncertainty will dominate the country following the decision of President Emmanuel Macron to dissolve the Assembly national.
Without causing an earthquake on the market, Emmanuel Macron’s decision to dissolve the National Assembly in France adds tension to French rates.
Around 8:55 a.m., the yield on the 10-year French Treasury bond stood at 3.160% compared to 3.103% on Friday on the secondary market, that is to say where investors exchange countries’ debt among themselves. . The 10-year French debt rate is thus approaching its level of last November.
To measure the tension in a particular country, investors look at the 10-year debt rate of that same country with another reference country, considered virtuous in terms of public finances (Germany in the euro zone). This difference is called “spread”.
A market that hates uncertainty
In the case of France, the 10-year rate gap with Germany widened slightly this Monday, rising to 52.7 basis points (0.527 percentage points) shortly before 8:50 a.m. compared to 48.5 basis points on Friday .
This increase in the spread is notable, but the rate difference was higher at the start of the year (54 points in January according to data from investing.com).
At the end of European elections which, in France, placed the National Rally very clearly in the lead, the President of the Republic Emmanuel Macron decided to learn the lessons of this election, by dissolving the National Assembly. The French will be called to the polls to elect their representatives to the National Assembly, during two rounds, on June 30 and July 7.
This unexpected decision creates significant political uncertainty regarding the future parliamentary majority, with the specter of possible political cohabitation. However, the market hates uncertainty.
“This situation of uncertainty could create a chaotic evolution of the markets during the period. However, the uncertainty of the arrival to power of the extreme right in France could be put into perspective, with the policies pursued by Giorgia Meloni in Italy , whose party also collected the largest number of votes in the European election”, underlines Sebastian Paris Horvitz, director of research at LBPAM.
Julien Marion – ©2024 BFM Bourse