Investors Unsettled By News Of Possible French-Left Collaboration
Jean-Luc Melenchon_2202_FE
Jean-Luc Melenchon
Problems With The French Left, Keep Potential For Le Pen Victory Alive
At the end of last week, bond investors were unnerved by news of a potential alliance between Benoit Hamon, the Socialist Party candidate, and the Left Party’s Jean-Luc Melenchon. Looking at the current polling suggests that a united Left-Socialist candidate could make it through to the second round of voting, coming just behind the Far Right candidate Marine Le Pen. This could actually increase the chances of a Le Pen victory as more right-leaning voters would likely either abstain or vote for Le Pen. Her agenda to leave the EU and abandon EUR would require Parliamentary approval and as such represents an unlikely outcome.
However, initial signs over the weekend suggest that such an alliance is precarious at best as Hamon and Melenchon trade insults and looked far from allies. However, the prospect of a co-operation between the two is not to be completely ruled out as there reports of a meeting between the two, scheduled to take place this week, but given recent events, an allegiance does seem unlikely.
This clearly keeps the tail risk of a Len Pen victory firmly alive. Current polling suggests that Le Pen will likely make it through the first then lose in the second round, by a significant margin, to either the centre-right candidate Fillon or the independent Macron. This scenario remains the most likely even in reference to Monday’s poll, published by OpinionWay, which sparked a further widening of French sovereign bond spreads over Germany.
Read more: https://www.orbex.com/blog/2017/02/investors-unsettled-news-possible-french-left-collaboration/