The constant narrative states that the sell off in French debt is directly correlated to political risk; namely the
chances of a Le Pen presidency. The numbers suggest that this is not the case. French bonds are popular this morning
on the back of the news that French economic confidence has hit a six-year high. The current implied probability
of a Le Pen presidency remains at the 30% mark. At this point in time, there is simply no correlation between French bonds
and political risk. Or to put it another way, the last time that French yields were this low the current implied probability
of a Le Pen presidency was around 20% (compared with 30% this morning).
Le Pen Probabilities v. France 10 Year
|Date||Le Pen Implied Probability||France 10 Year|
Source: Betfair and Investing.Com
To cite this article: Niall O'Connor
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