Two days before the runoff

Two days before the runoff of the French Presidential Election, Emmanuel Macron is still clearly leading in polls. He is expected to have 62% of voters versus 38% for Le Pen. The recent upside for Macron is the consequence of Wednesday debate between the two contenders.
Le Pen was very aggressive as she wanted to destabilize Macron. She spent all her energy on that and nothing on explaining her program. Moreover on Europe which is a very important topic for her and her political party she was not clear. Her program is to exit from the Euro Area and from all European institutions. But she was not able to explain why and on the currency framework that would prevail after a Frexit. What she said was approximate and sometime totally wrong. Macron knew more on this topic than her.
At the same time Macron was not destabilized and was able to explain his program. In polls after the debate he was the winner with a large margin.
Polls-FE-May-5-2017

The second point to mention is that we now have polls on the general elections. (June the 11th and the 18th)  Macron’s party “En Marche” could have an absolute majority, the second would be Les Républicains the conservative party, the Parti Socialiste which current President Holland Party would be third, ahead of Le Front National of Marine le Pen and le Front de Gauche of Jean Luc Mélenchon (Source OpinionWay).
On the 535 districts (just France without Atlantic and Pacific Islands and Corsica). En Marche would have between 249 and 286 seats (the average is 267.5 or 50% of the 535), Les Républicains would have between 200 and 210 seats (38%), the Parti Socialiste between 28 and 43 (6.6%), the Front National (of Marine Le Pen) between 15 and 25 seats (3.7%) and le Front de Gauche (Mélenchon) between 6 and 8 seats (1.3%)
The balance of strength would be for En Marche. This is not surprising as French people are legitimist. They will give an important power to the President-Elect.

Markets have already this scenario in mind. The Euro is close to 1.1, the CAC 40 is at its year high and the spread between French OAT and German Bund has narrowed. The mood is back to “business as usual”. Two things to say: the risk on risky French markets for Monday is a drop (buy on rumor and sell on news) but the French economy is doing well as the Euro does also. It means good prospects for France in months ahead.

The risk of a Le Pen’s win appears limited now.

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