The prospects for Europe after election uncertainty clears

Three key national elections

clock • 2 min read

The European agenda is heating up with elections in the Netherlands, France and Italy approaching. The Greek bailout is also going through a new round of uncertainty, writes Jean-Baptiste Berthon, senior strategist at Lyxor Asset Management.

Unsurprisingly, market stress has been steadily strengthening. The 10-year sovereign spread over bunds for these countries rose by 30bps-40bps year-to-date, with the exception of the Greek spread which rose 70bps.  We expect a tail-risk will increasingly be factored in until clarity is regained, keeping European assets under pressure in the coming weeks. In the Netherlands, the far-right party is leading in the polls. Yet, even if it was to control a quarter of the seats in parliaments, it would not be in a position to form a government.  Instead, a coalition involving the mainstre...

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