STIR: Euribor Futures Lower As RN Unlikely To Achieve Absolute Majority In Franc

Euribor futures are -1.0 to -3.5, as EUR rates markets unwind some of the political risk premium that was priced in ahead of the French election.

• Results from the first round of voting point to the far-right RN winning the most seats but likely falling short of an absolute majority.
• Potential second round voting understandings between Macron and the leftist block seem to further reduce odds of an RN absolute majority.
• We had assigned a 45% probability of this outcome in our election preview.
• ECB-dated OIS price 40bps of cuts through the remainder of ’24 vs 42bps at Friday’s close.
• Outside of the French election, regional macro focus is on the German June flash inflation data (state-level results cross from 0900BST) and the June manufacturing PMIs (final readings for France, Germany, EZ).
• The ECB’s annual Central Banking forum in Sintra also begins today, running through Wednesday. ECB President Lagarde provides introductory remarks this evening (2000BST).
• Bundesbank’s Nagel is separately scheduled to speak at 1315BST today.