Some relief for French bonds.
The country’s 10-year bonds have snapped a three-day losing streak this afternoon after presidential candidate Francois Bayrou threw his weight behind Emmanuel Macron in the upcoming elections.
France’s benchmark bond yield, which moves inversely to its price, tumbled 7 basis points today to 1.01 per cent as investor demand for the paper accelerated on the boost for the pro-EU candidate Mr Macron.
France’s bonds have become a volatile barometer for investor sentiment over the election which kicks off in the last week of April.
Mr Bayrou, who had been polling around 5-6 per cent in recent weeks, said he would back his fellow centrist independent candidate in a bid to block Marine Le Pen’s bid for the Elysee palace.
That’s helped yields on 10-year debt have hit their lowest in a week and narrow the premium investors are demanding to hold French over German debt from a post-eurozone crisis high hit yesterday.
Ms Le Pen is on course to triumph in the first round vote, polling around 27 per cent compared to Mr Macron at around 20 per cent. The Front National leader has vowed to end France’s 18-year membership of the eurozone, redenominate the country’s near €2tn debt pile, and embark on a major spending blitz should she become president.
Financial markets have grown increasingly jittery at the prospect of a Le Pen victory, with polls this week showing steadily rising support for the eurosceptic candidate.
An Elabe poll published yesterday found Ms Le Pen is making ground on her rival in second round voting intentions. As it stands, she would lose out to Mr Macron by 59 per cent to 41 per cent – a 4 point gain in her favour in the course of the last week.