Initial sell-side reactions to the French election outcome can be found below:

• Citi: It opens the tail of a left-of-centre PM. This is a widening risk for OATs. The only possibility of OAT spread tightening here is from any emergence of a centrist coalition, that is still arithmetically possible but would be difficult to cobble together. Overall, the result has ended up increasing uncertainty. This is likely to continue to weigh on OAT spreads for an extended period.
• Mizuho: While party leaders negotiate the future of the French National Assembly in the coming days or weeks, we expect to see bearish pressure across French assets. We expect 10Y OAT-Bund spreads to move back towards the 75-85bp range.
• TD Securities: A left-led hung parliament is set to drive the OAT vs. Bund spread widening above 80bps. That said, ultimately a limbo state of government could see the spread return to linger around the 70bps level.
• UniCredit: Investors will need time to see what government is formed. This suggests a moderate underperformance of OATs. Large moves are unlikely, as the stalemate will likely prevent the implementation of any strong policies. The deterioration in French public finances creates an unfriendly environment for OATs beyond the short-term reaction to the elections.