12 June 2017 by lberuti
French people gave a landslide majority in Parliament to their newly elected President. Based on the results of the first round, Mr Macron’s party, La République En Marche, should have around 70% of the seats. But the election results investors paid much attention to were actually the results of the Italian local elections, which were also held on Sunday. Italy’s opposition Five Star movement suffered heavy setbacks, failing to make it into the second round of voting in big cities such as Genoa, Palermo, Parma and Verona. Speculations over the last couple of weeks that Italy was headed towards general elections as early as September pushed the country’s 5-year risk premium up, as the prospect of a non-market-friendly outcome put investors off. But the fact that a multi-party deal on a new electoral law unraveled last week and made it highly unlikely that a snap national vote will be held this year was compounded by the week-end results which dimmed Five Star’s prospects of leading the national government after parliamentary elections. Investors cheered by sending Italy’s 5-year risk premium 5bps tighter to 158bps, almost back to the tightest levels of the year.