Quote (Black XistenZ @ Jul 7 2024 05:14pm)
This whole snap election backfired spectacularly for Macron. He cost a lot of his own party's MPs their job, his PM, protégé and designated successor Attal had to step down, the RN still roughly doubles its seats in parliament, there is still no clear majority and the three blocks might well gridlock each other completely.
And the strategic alliance with the leftist bloc which they engaged in to stop the RN has inflated the leftist's seat count to the point where Macron will have to compromise with their policies to at least some extent - although the neo-communist LFI and the traditional communists are even further apart from him, policy-wise, than even the RN would be.
The best he can hope for is that his own Ensemble party, the mainstream conservative Les Republicains, the Greens and the mainstream leftist Socialistes can barely eke out enough seats to form a "grand coalition of the middle" against both the RN and LFI. But the Greens and Socialistes now have him by the balls in this regard and will demand concessions which will be painful for Macron's own base (and donors...), plus add further fuel to the fire for the RN.
I like to look at financial markets responses to political events, that's one of the truest north stars. Euro falls despite the right being denied leadership, we'll see Monday what French bonds do. French gonna continue to spend above their means.
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...Yet investors also have concerns that the French left’s plans could unwind many of President Emmanuel Macron’s pro-market reforms. And they believe political gridlock could end attempts to rein in France's debt, which stood at 110.6% of gross domestic product (GDP) in 2023.
The euro fell 0.2% to $1.081 as the week’s trading got underway. It had climbed last week as opinion polls suggested a hung parliament was likely, assuaging fears of a far right victory, after dropping sharply - along with stocks and bonds - when Macron called the elections in early June.
“It looks like the anti-far right parties really got a lot of support,” said Simon Harvey, head of FX analysis at Monex Europe.
“But fundamentally from a market perspective, there’s no difference in terms of the outcome. There’s really going to be a vacuum when it comes to France’s legislative ability."
Harvey added: "The bond market is going to be the real place to look at. There might be a bit of a gap lower in French bonds (prices)."