Macron wins 65.8% of votes, what next for markets? - Socgen

Kit Juckes, an economist at Societe Generale noted the Macron victory and offered a breakdown of his thoughts on the matter.

Key Quotes:

"What next? President Macron will appoint a PM and an interim government. Attention turns to the legislative election on June 11 and 18.

Rates: EGB spreads are collapsing, because of a desperate search for yield with few near-term risks, rather than any election relief per se. Bunds are exposed as tail risk falls.

FX: EUR/USD many pauses before the next leg up, having already overshot vs rates and given the risk of profit taking. EUR/JPY should gain, HUF and PLN should gain more.

Credit: Markets may tighten further after the final vote of the French presidential election. Nonetheless, thoughts should quickly turn to whether CSPP can end soon.

Equity: Macron winning was expected and mostly priced in. Eurozone markets should outperform: we favour our long-term calls on Italy (FTSE MIB) and Banks (SX7E).

Equity derivatives: Equity vol collapsed after the first round, and we see little scope for lower moves. The focus should shift quickly to the general elections and then to the German election.

Technicals: CAC40 on the verge of confirming a paradigm shift.

*Macron set to be the next president
The preliminary results show Emmanuel Macron winning the election with 65.8% of votes, against 34.2% for Marine Le Pen. President Hollande indicated that the inauguration of the new president will happen on 14 May. Macron is set to follow tradition and announce a new government on the same day."