FRANCE: Poll-63% Back Dissolving National Assembly & Snap Elections

Aug-27 07:36

The latest polling from Ifop (carried out on 26 Aug, after PM Francois Bayrou's announcement of a confidence vote in his gov't) found a large majority of respondents in favour of the dissolution of the National Assembly and snap legislative elections. In total, 63% of respondents favoured dissolution, with 33% "absolutely" in favour. This represents an increase in overall support for dissolution from 41% in June and 50% in July. 

  • Unsurprisingly, those in favour of dissolution are largely supporters of opposition parties. Among far-right Rassemblement National (National Rally, RN) supporters, 86% are in favour of snap elections, as are 75% of those who vote for the far-left La France Insoumise (France Unbowed, LFI). Only 36% of supporters of President Emmanuel Macron's centrist Rennaissance support snap elections.
  • In terms of whether respondents believe President Macron will dissolve the National Assembly 49% say they think he will, 51% believe he will not. The proportion of those that think the president will call snap elections has increased from 30% in June and 34% in July.
  • Seventy-four per cent of respondents believe the defeat of Bayrou in the upcoming 8 Sep confidence vote would be a sign France is "ungovernable". A total of 68% believe if snap elections take place and once again there is no clear governable majority, Macron would have to resign as president, but only 50% believe that LFI leader Jean-Luc Melenchon was right to move to dismiss Macron.
  • Data from Polymarket shows bettors assigning a 20% implied probability that fresh elections are called by 15 September, rising to 41% by year-end. 

Historical bullets

CROSS ASSET: A quick turnaround in Equities

Jul-28 07:35
  • A quick turnaround for the Estoxx Futures (VGU5), back at session lows, the Opening gap would be down to 5390.00, but not a good technical study to use for these type of contracts.
  • The Price action has dragged the Cash SX5E under 5400.00, but the pace is more limited for now.
  • The EUR is coming under some small pressure, testing the intraday low against the USD, CAD, TRY, CHF, JPY and GBP.
  • Some of the Risk Off in the past few minutes is dragging the AUD at session low, but the Dollar bid has also been a driver so far Today.

EURIBOR: Some big Volumes in the back Calendar Spreads

Jul-28 07:25
  • We noted some notable early flow in the Blue ERH9/M9 calendar spread, being sold down to 4.5 from a 5.5 record high printed last Week.
  • There's now a whopping 34k ERM7/U7 spread seller, which explains the massive volumes in those expiries.

EGBS: Peripherals Outperform As Equities Rally

Jul-28 07:22

German yields are now 1.5-2.5bp lower across the curve, with the belly & intermediates outperforming.

  • EGB spreads to Bunds are little changed to 1bp tighter, with the periphery outperforming as equities firm in the wake of the U.S.-EU trade deal.
  • Ongoing adjustments to that deal and focus on the Sino-U.S. meeting in Stockholm are noted.