Daily update
Daily update
- France’s second-round legislative election produced an unexpected result, with the far right Rassemblement National pushed into third place. This highlights again a market problem—politics is becoming more important to markets, but opinion polls are less reliable as a guide to outcomes. Polarization means financial institutions try to strike a neutral tone—“opinion polls suggest” rather than “we believe that”, but if polls are less reliable market mispricing is more common.
- For France, there is a prospect of either a minority government or a probably unstable coalition (the constitution prohibits new elections for another year). The largest bloc is the left-wing Nouveau Front Populaire, and on some costings their unfunded fiscal pledges amounted to two Trusses (4% of GDP). It would be difficult to be so radical given these political circumstances, but equally tackling France’s unsustainable fiscal situation is less likely.
- Japanese nominal wage gains were the best since the 1990s, but fell in real terms (both numbers disappointed expectations). Japanese consumer data has also tended to disappoint a little recently. US consumer credit data is due, and has tended to be lower than expected this year.
- Germany’s May imports and exports fell, and by more than consensus expectations (although relatively few economists forecast German trade).
