FRANCE: Politics On Hiatus As Olympics Get Underway
A messy and chaotic period in French politics comes to a (temporary) end on 26 July, with the opening ceremony for the Olympic Games in Paris. President Emmanuel Macron has said that no new gov't will be appointed during the course of the Games, which conclude with the closing ceremony on 11 August. For this period at least, PM Gabriel Attal and the Cabinet remain in place in a caretaker capacity, dealing with day-to-day issues (notably the arson attack that has crippled the Parisian high-speed rail network).
- Once the Games are concluded, the three most likely scenarios to resolving the political impasse appear to be:
- The left-wing New Popular Front (NFP) decides on a new candidate, Macron accepts and there is a minority left gov't.
- The centre-left (Socialist Party, The Ecologists) break off from the NFP, forming a gov't with the centrist Ensemble bloc supportive of Macron and potentially the centre-right Les Republicains.
- Absolutely no agreement is possible, resulting in some form of technocratic gov't akin to that of former ECB President Mario Draghi who took over a neutral administration in Italy in 2021.
- There is no set timeframe for when a new gov't must be appointed. However, the longer the current period of political limbo continues, the longer the period in which the gov't cannot materially alter policy.
- Notably, earlier on 26 July the European Commission officially placed France, among six others, under the Excessive Deficit Procedure. Under the EDP, the EU now expects the gov'ts to supply medium-term plans on deficit reduction by mid-September. The Commission will then provide its evaluation of the plans in November.
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FRANCE: MNI Publishes Election Preview
In a decision that will have significant repercussions for domestic politics, as well as on the wider European continent, President Emmanuel Macron has called a snap legislative election to take place on 30 June and 7 July. Macron called the election after the right-wing nationalist Rassembelement National (National Rally, RN) won a comfortable victory in France’s election to the European Parliament on 9 June, saying in a national address that “I’ve decided to give you back the choice of our parliamentary future through the vote. I am therefore dissolving the National Assembly.”
- In this preview, we have an explainer of the somewhat complex electoral system used for the National Assembly; outline the main political alliances and parties contesting the vote; provide analysis of various election scenarios with assigned probabilities; write on the outlook for France's financial and credit markets and the country's power and energy sectors; assemble a chartpack of the latest opinion polling and betting market predictions for the election; and select the key views from a host of analysts regarding the implications of the contest.
STIR: ECB Implied Rates Little Changed In Spite Of Core FI Weakness
Although the renewed pressure in core FI has partially fed through to Euribor futures, ECB implied rates sit broadly unchanged versus this morning’s levels (and are also little changed across this week overall).
- ECB-dated OIS show 44bps of cuts through the remainder of ’24 and 19bps of easing through the September meeting (~75% implied probability of a 25bp rate cut).
- This afternoon’s weakness in core FI has largely been US-led, ahead of the USD70bln 5-year UST auction this afternoon.
- ECB speakers Lane and Kazaks added little new to the debate.
- Tomorrow’s regional calendar includes scheduled speeches from Muller and Kazimir, while the EC’s consumer and business survey headlines on the data front.
- Focus remains on Friday’s flash inflation data from France, Spain and Italy, not least after upward surprises to Canadian and Australian inflation already this week.
- Our full preview, released today, is here.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jul-24 | 3.643 | -2.0 |
| Sep-24 | 3.473 | -19.0 |
| Oct-24 | 3.399 | -26.5 |
| Dec-24 | 3.219 | -44.4 |
| Jan-25 | 3.133 | -53.0 |
| Mar-25 | 3.002 | -66.1 |
| Apr-25 | 2.928 | -73.5 |
| Jun-25 | 2.806 | -85.7 |
| Source: MNI/Bloomberg. 2025 dates are estimated. | ||
MNI EXCLUSIVE: MNI Speaks With Ex-Chicago Fed President Charlie Evans
MNI speaks with ex-Chicago Fed President Charlie Evans. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
