FRANCE: PM Renounces Art. 49.3 In Gamble To Avoid Censure & Get Budget Approved

Oct-03 08:37

PM Sebastien Lecornu has renounced the use of Article 49.3 of the French Constitution in an effort to avoid an early censure motion and get a debate underway in the National Assembly on his 2026 draft budget law (PLF). Lecornu claims that "Since the government can no longer be in a position to interrupt the debates, there is therefore no longer any excuse for these debates not to start next week."

  • Art 49.3 allows for the gov't to force through bills without a parliamentary vote, and indeed, recent Prime Ministers Elisabeth Borne, Michel Barnier, and Francois Bayrou have all utilised the provision over the past three years. Invoking Art. 49.3 brings the immediate risk of a censure vote against the minority gov't
  • Lecornu began budget talks earlier this morning with Marine Le Pen, leader of the far-right Rassemblement National in the National Assembly. He is due to meet with leaders of the centre-left Socialist Party (PS) ~10:30CET, followed by the Ecologists at ~11:30CET and the Communists at ~12:30CET.
  • It remains to be seen whether the PM's move has brought him enough goodwill to get his budget proposals to the National Assembly. Communist Party leader Fabien Roussell said after Lecornu's announcement, "We have to break the impasse, we have to move forward. I'm more in favour of a culture of dialogue and letting Parliament do its job". However, PS National Assembly leader Boris Vallud warned today's talks mark the "last chance" to avoid censure and that the gov't has other tools to "capture parliament".

Historical bullets

FOREX: FX OPTION EXPIRY

Sep-03 08:35

Of note:

EURUSD 2bn at 1.1680/1.1700 (a little far).

EURUSD 2.11bn at 1.1600 (thu).

EURUSD 2.05bn at 1.1600 (fri).

AUDUSD 1.08bn at 0.6500 (fri).

  • EURUSD: 1.1600 (942mln), 1.1625 (524mln), 1.1650 (746mln), 1.1680 (948mln), 1.1700 (1.06bn).
  • GBPUSD: 1.3350 (326mln).
  • USDJPY: 148.00 (624mln), 148.50 (566mln), 149.00 (508mln).
  • AUDUSD: 0.6475 (570mln).
  • USDZAR: 17.8500 (380mln).

EGBS: UniCredit Underscore Need For Ongoing Issuance To Boost EU Bond Demand

Sep-03 08:30

UniCredit write “investor demand for EU bonds has proven healthy so far this year but does not seem to have been sufficient to convince markets to ask for their inclusion in sovereign bond indices. Investors remain concerned that issuance activity by the EU will drop after the NGEU program is phased out after next year”.

  • In their view, “common funding will be more frequent than it was before the pandemic, as the EU will want to capitalise on the success of the NGEU program and to address issues that require common action, such as defence, competitiveness and environmental goals. The recent launch of a new defence program, Security Action for Europe (SAFE), the funding of which could require up to EUR150bn, is a good example in this respect. More frequent issuance activity would enhance EU bond liquidity and would encourage demand from investors looking for higher yields than those offered by Bunds or seeking less idiosyncratic risk than that associated with OATs”.

MNI: UK AUG SERV PMI 54.2 (53.6 FLASH, 51.8 JUL)

Sep-03 08:30
  • MNI: UK AUG SERV PMI 54.2 (53.6 FLASH, 51.8 JUL)