French market contagion 'relatively limited' amid snap election

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European Central Bank News

Inflation Expectations,Bond Markets,Inflation Outlook

French equity markets (^FCHI, ^SBF120) are seeing moves higher after the far-right National Rally party secured a first-round lead in France's snap election....

discusses the likelihood of contagion from French equity and bond markets and the European Central Bank's outlook on inflation.

And one thing to look at least in the immediate term is to see how a French government bond auction goes this week to gauge invest appetite. And the third key thing that we're focused on is really does all of this pose any potential implications for the European Central Bank and its path to policy normalisation?

And so these complex dynamics really underscore the fact that the E CV is going to maintain its data dependent approach. We're looking to see if the labour market is continuing to rebalance in a way that would alleviate wage pressures and therefore services in inflation pressures and therefore open the door to rate cuts in terms of like how investors should be positioned.Labour markets are still that supports consumer spending, a key determinant of growth in almost every advanced economy.Well, because valuations are tight or extended.And as you notice at the outset, we have political uncertainty.

 

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