France in crisis as the government collapses. Ministers fell out over the economy and how to kick-start growth. Prime Minister Manuel Valls will try to form a new government on Tuesday. Christoph Rieger, Head of Interest Rate Strategy at Commerzbank says a new government is unlikely to do any better than the old one.

SHOWS: FRANKFURT, GERMANY (REUTERS - ACCESS ALL) (AUGUST 25, 2014)

1. COMMERZBANK, HEAD OF INTEREST RATE STRATEGY, CHRISTOPH RIEGER, SAYING:

JOURNALIST ASKING CHRISTOPH RIEGER: 'Now, French bond yields dropping to historic lows, is this a thumbs up from the markets do you think for what looks like a commitment at the pace of deficit reduction?'

CHRISTOPH RIEGER: 'No. I think the market is trading something else today namely ECB's, ECB speculation but it is true. It's not just that yields in France have fallen to in the record lows today. They've also outperformed Germany so it looks like at least the market is not overly nervous about the domestic issues that France is facing. But I would say, in absence of these, probably the market reaction would have been even stronger.

JOURNALIST: 'Now the French economy is still stagnant. Unemployment is high. There's a growing impatience from Germany among others for the kind of reforms that so far haven't happened. So Hollande is in a difficult position, isn't he?'

CHRISTOPH RIEGER: 'Yes, certainly, and right now it's up to Valls to basically form a new government and ultimately, I mean, with Montebourg likely dropping out, we'll see tomorrow. The end result may not be so negative for the market as a very left leaning socialist would then drop out. So ultimately, this would be good for the economy, good for deficits as well but clearly, near term, the uncertainty will weigh at least marginally also on market pricing. Like I said, it's overshadowed by a number of other events like the ECB. But before, basically, the French Parliament that has endorsed the new government which is of course not a clear cut decision, the market will be nervous regarding the domestic politics in France but in terms of market pricing, it's very odd, will also remain only very marginal reflected there.'

JOURNALIST: 'Based on that new government, it's expected to be formed tomorrow, what do you think its first policy announcement should be?'

CHRISTOPH RIEGER: 'Well it should be to go back to the deficit reduction path. This is certainly not what a number of commentators are looking to see. And given the latest twist from Draghi that we've seen in his Jackson Hole speech, even the ECB does not seem keen to basically put France back on track after they have repeatedly revised up their deficit projections for this year and next. So in the end, I think we'll get a mix of modest tax cuts and spending measures. And ultimately, the new government will also then struggle to basically fail to meet the deficit targets.'