Chief Economist & Head of Investment Strategy Group, Europe at Vanguard Asset Management.
A pleasure to be on Bloomberg with Francine Lacqua on the 4th of July! The topic of discussion was #French #Elections and #markets. Top line: it’s always hard to predict the outcome of elections and how markets will respond to the result. 📊That said polls are suggesting there won’t be a clear majority for one party, giving rise to a hung parliament/coalition. This creates potential policy uncertainty for a couple of years. 📈Markets ultimately care about economic fundamentals. In the case of France, the worry is public finances: deficits stand at 5-6%, and are projected to fall to 3% under Macron’s existing policies. The risk is that the defict will be higher under the new government. ⚖️Such fiscal risks typically show up as higher term premia and wider corporate bond spreads. We saw French government bond yields over bunds rise to 80bps after the snap election announcements. Spreads have come in a bit following the first round, but remain elevated. Depending on the election outcome, these wider spreads could last for years. Thanks to Ranieri Omenetto Arcella, Lukas Brandl-Cheng and Shaan Raithatha, CFA for developing our team view on this topic. #VanguardInsights #Elections #ECB #fiscalsustainabilty Vanguard for Investment Professionals Vanguard Investment Research
Wealth Management - Asset Management - Banking - Change Management
2wJumana you are both pragmatic and inspiring!