Sunday Thoughts
It’s election time. While we are slowly winding down and readying ourselves for a well-deserved summer break, political waves are coming in. The exit polls from the first round of the French parliamentary election show Le Pen’s Rally National with a clear win. On the strongest turnout in around 40 years (close to 60%), the exit polls show the following:
Rally National: 33-34.2% of the vote. This equates to 240-310 seats in parliament.
Left Alliance: 28.5-29.6% of the vote. This equates to 76-200 seats in parliament.
Ensemble: 21.5%-22.4% of the vote. This equates to 60-138 seats in parliament.
Based on the results so far, President Macron will have to engage a PM from RN. The question is whether RN can convert its relative majority in round one to an absolute majority in round two.
There is still a lot to play for, and the situation remains fluid as we look forward to the second round next weekend. All would indicate a likely hung parliament, which isn’t the worst outcome, has already been priced in by markets.
With all this flux in motion, it’s important to keep in mind where positioning is. The table below gives a good summary with corresponding z-scores for net positioning in futures.
Looking at the most bullish and bearish positioning in more detail, let’s quickly glance at the following tables.
While it can give us an indication of where overall positioning roughly is, I would always urge caution when using any positioning estimates as the real world is way more complicated, and one can not only look at futures data alone. Intuitively, however, I think those positions make sense in the current context.
Let’s now see what Macro D thinks before we dive into the week’s calendar and the most important charts to acquaint ourselves with.
Let’s go!
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