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Waterloo or Austerlitz Revisited

03 March 2017 by pdonnat

The French conservative leader Francois Fillon will face a crucial test this weekend. He is calling his supporters to join a rally next Sunday in Paris. If he fails to gather significant support he could resign as early as next week. The credit market was weighing up the possibility of his departure and Alain Juppe coming back into the race. This was enough to have investors scaling back their hedges ahead of the weekend. After an intial weak opening, the credit market closed the day on a better tone. The French names, especially the banks, are the best performer of the week with BNP and Societe Generale senior CDS closing 15bps tighter over the week, wrapped around 80bps. All bets are off, but it could be again quite a surprise for the market and the opinion polls if Fillon’s support is stronger than expected. This is the last stand for Francois Fillon.