French Assets Decline Amid 2027 Election Uncertainty
French government bonds and stocks face significant pressure as Marine Le Pen leads polling for the 2027 presidential election.
French financial assets are experiencing heightened volatility as the country enters a political cycle leading toward the 2027 presidential election. Marine Le Pen currently leads first-round polling with over 30%, followed by candidates Édouard Philippe and Jean-Luc Mélenchon.
Market instability is driven by concerns over France's fiscal credibility, with public debt nearing 120% of GDP and a fiscal deficit exceeding 5%. These conditions have pushed French 10-year government bond yields to 4.2%, the highest level since 2008, and widened the OAT-Bund spread beyond 80 basis points.
Goldman Sachs reports that the CAC 40 has been the weakest major large-cap index in Europe for three consecutive years. While the National Rally has abandoned its previous anti-euro stance, investors continue to apply a risk premium to French stocks. Analysts warn that a fragmented parliament could prevent the spending cuts and reforms required to stabilize the national debt.
