Syz the moment

FIRST TAKE 1) French far-right has strong lead in France's 1st voting round. The National Rally (RN) was projected to get between 33% and 34.2% of the vote. The left-wing New Popular Front coalition was set to get between 28.5% and 29.6% and Macron’s centrist alliance between 21.5% and 22.4%. 2) The exit polls were in line with opinion polls ahead of the election, but provided little clarity on whether the RN will be able to form a government to "cohabit" with the pro-EU Macron after next Sunday's run-off. As projections show between 240 to 270 seats won at the second round, the RN could thus get a relative majority in Parliament. Le Pen party needs 289 seats for a majority in the second round French ballot. Bottom-line >>> The National Rally is likely to win the elections. Question is would it be a RELATIVE or ABSOLUTE majority. There are 3 possible outcomes: 1/ Absolute majority (Bardella as Prime Minister) Expect modest OAT-Bund spread widening and another (modest) downside leg for French equities (especially “national victims”) 2/ Minority majority / Hung parliament Expect a modest OAT-Bund spread widening and French equities stabilize 3/ Caretaker or Technical government Expect a modest OAT-Bund spread tightening and French equities rebound (especially “national victims”). The euro is currently STRENGTHENING as Asia trading just started. This means that markets are now expecting a HUNG PARLIAMENT with no Prime Minister coming from Rassemblement National. Even of the party from Mrs Le Pen win the election, they will refuse to appoint Bardella as PM. This opens the door to a Prime Minster coming from the center or a technical one. This means political paralysis but markets can probably live with this...

Source: HolgerZ, Bloomberg

President Emmanuel Macron’s approval rating fell to the lowest level in three months, delivering a boost to Marine Le Pen’s far-right National Rally party just two days before voting starts in France’s legislative election. Support for Macron dropped six points to 36%, the worst showing since March, according to a Toluna-Harris Interactive poll for LCI TV published on Friday. Source: Bloomberg

Source: The Market Ear

Hollande is running for a seat in Parliament and Macron didn't put any candidate in front of him. In the (plausible) scenario of a hung parliament, Hollande could be chosen by Macron as Prime Minister of a unity government.

This shows far-right way ahead (36% in blue) ahead of far left coalition (28.5% in red) while incumbent Macron's center-right party comes 3rd (21% in orange). It seems that far-right will at least win relative majority

Source: FT

Europe’s gas imports from russia overtook supplies from the US for the first time in almost two years in May, despite the region’s efforts to wean itself off Russian fossil fuels since the full scale invasion of Ukraine. While one-off factors drove the reversal, it highlights the difficulty of further reducing Europe’s dependence on gas from Russia, with several eastern European countries still relying on imports from their neighbour. The US overtook Russia as a supplier of gas to Europe in September 2022, and has since 2023 accounted for about a fifth of the region’s supply. But last month, Russian-piped gas and LNG shipments accounted for 15 per cent of total supply to the EU, UK, Switzerland, Serbia, Bosnia and Herzegovina and North Macedonia, according to data from ICIS. LNG from the US made up 14 per cent of supply to the region, its lowest level since August 2022, the ICIS data showed. Link to Article >>> https://lnkd.in/eJJjKBFi Source: FT