French election – seems less likely that one group will have a majority after second round

UBS with a not very uplifting view on the outcome of the French election for investment certainty.

In brief:

• large number of second-round votes could be three-way contests
• makes the final outcome harder to predict
• its not clear how many third-placed moderate candidates will withdraw to form a “front républicain” to increase the chances of defeating a more extreme party
• seems less likely that one group will have a majority after the second round, but investors would be unwise to place too much confidence in that
• a weaker minority government is unlikely to tackle France’s fiscal situation

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The ECB may be in to bail out French bond holders. Or not. They will if they have to. Its what they do.

This article was written by Eamonn Sheridan at www.forexlive.com.