Market mistrust regarding the possible accession to power of the RN or the new Front Populaire has brought Christine Lagarde out of her silence: she declares that the ECB is being "attentive", but that there is no reason to envisage support for French debt.
And the facts seem to prove her right, as the yield spread between the French ten-year OAT (3.155%) and the German benchmark rate narrowed on Monday by 80 basis points compared with Friday (-7.5 points).

OATs eased -1.2pts to 3.157%, but Bunds tightened +6pts to 2.412%.
On the other hand, Italian BTPs eased +3pts to 3.945%... and Portuguese 10-years continue to do very well, with a parity score of 3.156%... identical to that of our OATs.

Let's not forget that the political risk is not just French: the coalition in power in Germany is facing major differences over the budget, and a new government is due to be formed in Belgium", points out Christopher Dembik, Investment Strategy Advisor at Pictet AM.

The question is how long this correction phase will last, and whether it also marks the beginning of the end of the equity market rally.

Economic indicators, particularly those relating to inflation, which are likely to influence the trajectory of central banks' monetary policies, should therefore continue to have a major impact this week.
Meanwhile, we have just discovered that manufacturing activity fell slightly in June in the New York area, according to the local Fed's 'Empire State' survey.
New orders remained stable, while shipments rose slightly. Labor market conditions remained weak, with employment and hours worked continuing to contract.

The pace of input and selling price increases slowed slightly for the second consecutive month. Although current activity remains weak, optimism about the six-month outlook reached its highest level in over two years.
The only cause for satisfaction: the 'general conditions' index gained ten points but remained below zero, at -6.0.

T-Bonds deteriorated sharply on Monday, with +8pts to 4.2920%, dragging in their wake the British 'Gilts', which tightened by +7.5pts to 4.1560%.
Let's not forget that the UK general election will be held on July 4, and that Richi Sunak and the Conservatives (only 18% of voting intentions, barely half that of Labour at 37%) are in a poor position in the polls, trailing the Liberal Democrats at 14% (their best score ever).

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