Another day, another headache for owners of French bonds. In the latest French presidential poll, conducted by Elabe for TV broadcaster BFMTV, Marine Le Pen extended her lead by another 2-3 points, while support for her primary centrist challenger Emmanuel Macron, tumbled by 5 points in the last week.
The poll, released today, showed that Le Pen’s lead rose by either 1.5 points to 27% or by 2 points to 28%, depending whether centrist candidate Francois Bayrou would take part in the election…
… or withdraw.
The most surprising result, however, is the plunge in Macron’s odds, who lost five points in the first round voting intentions compared to the same poll conducted two weeks ago. Macron, who is the former French economy minister and who is running on a pro-EU platform, fell to third place behind right-wing candidate Francois Fillon, whom he eclipsed earlier in the month after a major embezzlement scandal erupted in which Fillon was accused of using public funds to pay for his family’s wages. Fillon gained 3 points in both variations of the poll.
But more concerning for her opponents, was the notable gains Le Pen made in the second round, where while still trailing behind both Fillon and Macron, she has seen a 4 points gain in the past week, shrinking the difference between Macron in the runoff round to 59-41. Until several weeks ago, she was firmly in the 20% range.
Meanwhile, as we have observed virtually every single day in the past three weeks, the better Le Pen does the polls, the higher French yields rise, and the greater the spread to German bunds….
… over fears that a Le Pen victory would be the last nail in the coffin for the Eurozone. Le Pen’s FN party has warned it would take France out of the Eurozone, return to the French franc, and would redenominate billions in French debt, a step which leading economists and rating agencies last week declared would to “massive sovereign default” and global financial chaos.