EUR drops sharply and yields surge following Lecornu resignation
The political saga in France has taken a fresh twist as Sebastien Lecornu, the fifth prime minister appointed in the last two years, has unexpectedly resigned from the position just hours after appointing his cabinet.
Macron’s decision to call for snap elections last year has not paid off, as the deeply fragmented parliament has failed to find any sort of compromise.
The French president is now under severe pressure, with both the far-left France Unbowed and the far-right National Rally calling for his impeachment.
The impact on financial markets has been all too apparent, with the 10-yield yield spread between bonds in France and Germany, a proxy for the risk premium attached to French assets, up by over 10 basis points.
The euro has also dropped rather sharply, and is down almost 1% against the dollar, even amid the ongoing US government shutdown.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
