I'm reading this very nice piece belatedly but I'll try to avoid Monday morning quarterbacking (we've had the first round of the French parliamentary elections already). I would agree with the broad thrust of the post that the end of the EU, or the French Republic as we know it, is not nigh. Frexit, or euro breakup, are highly unlikely.
However, I think it's too early to buy France - at least for most investors. I believe we've entered a prolonged period of uncertainty, this could be a game of many innings. We may know more on come next Monday morning - or not. If you take a longer view, the election will have implications for how markets price the probability of a far right President in 2027. More immediately, if we were to get an absolute majority for the far right, it's unclear whether they will accept the EU policy framework (if I may plug my piece: https://open.substack.com/pub/thinicemacroeconomics/p/european-risk-redux?r=1oa8fn&utm_campaign=post&utm_medium=web).
Bottom line: buying France now is quite risky (and the risk-reward isn't great at the moment, certainly not in French bonds). More constructively: one can probably wait for better entry levels before buying France again.
I'm reading this very nice piece belatedly but I'll try to avoid Monday morning quarterbacking (we've had the first round of the French parliamentary elections already). I would agree with the broad thrust of the post that the end of the EU, or the French Republic as we know it, is not nigh. Frexit, or euro breakup, are highly unlikely.
However, I think it's too early to buy France - at least for most investors. I believe we've entered a prolonged period of uncertainty, this could be a game of many innings. We may know more on come next Monday morning - or not. If you take a longer view, the election will have implications for how markets price the probability of a far right President in 2027. More immediately, if we were to get an absolute majority for the far right, it's unclear whether they will accept the EU policy framework (if I may plug my piece: https://open.substack.com/pub/thinicemacroeconomics/p/european-risk-redux?r=1oa8fn&utm_campaign=post&utm_medium=web).
Bottom line: buying France now is quite risky (and the risk-reward isn't great at the moment, certainly not in French bonds). More constructively: one can probably wait for better entry levels before buying France again.