Yesterday, the Euro and European stocks recorded a decent outperformance against their US counterparts.
OAT/Bund spreads showed some calm yesterday with a drop of 4 basis points, from 0.76% to 0.72%. As Sunday’s early elections in France approach, the markets have already factored in a significant risk premium on the budgetary level.
Arguably, the potential negative impact of a hung parliament (assuming Macron does not resign) or a far-right majority victory could already be reflected in the spread and implied volatility of d pairs. ‘euros.
It is also worth noting that this week corresponds to the end of the month, the end of the quarter and the end of the half-year, so we could also see some rebalancing flows in the mix, which will have nothing to do with macroeconomic risks or idiosyncratic issues currently in play.
Performance in EUR
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