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Daily Briefing: Old, new, left and right - Macron's parliament hopefuls
May 11, 2017 / 7:20 AM / 6 months ago

Daily Briefing: Old, new, left and right - Macron's parliament hopefuls

LONDON (Reuters) - Emmanuel Macron, whose party had never fought any election of any kind before he won the presidency, will announce today his 577 candidates for the June legislative elections.

French President elect Emmanuel Macron attends a ceremony to mark the anniversary of the abolition of slavery and to pay tribute to the victims of the slave trade at the Jardins du Luxembourg in Paris, France, May 10, 2017. REUTERS/Eric Feferberg/Pool

The focus will be on any big names from the former mainstream parties, what the rough mix is between right- and left-leaning characters, and where that sets up key battlegrounds for the two-round poll itself. There may also be some celebrity candidates and people with unusual backgrounds, as he has pledged at least half of their number will be from civil society.

Macron’s challenge is to pull in the right amount of experience while making the overall team look new enough to show things are changing.

Bank of England Governor Mark Carney is due to speak after the BoE publishes its May policy decision and new economic forecasts at 1100 GMT. The general expectation is that he will hint that, while rates are likely to rise at some point in the next couple of years, now is not the time: Brexit unknowns, a national election and mixed economic data all mean more clarity is needed.

At the Monetary Policy Committee's last meeting, in March, Kristin Forbes voted for a rate hike and some other members were close to joining her. But then signs emerged of an economic slowdown in early 2017; economists polled by Reuters see a 7-1 vote to keep interest rates on hold at their record low 0.25 percent.

A far-right leadership may just have been averted in France, but things are less certain in Austria. Chancellor Christian Kern is urging his conservative coalition partners to stay in the government after its leader unexpectedly quit. That raises the prospect of a snap election just as the anti-immigration Freedom Party (FPO) leads in opinion polls - giving them a chance of entering national government less than a year after its candidate lost a close-fought presidential race.


The biggest one-day jump in oil prices this year on Wednesday saw Brent crude rise more than 3 percent, recapturing the $50 level and reversing all the jarring losses suffered this time last week. The trigger was news of the biggest draw on oil inventories in 2017 and a bigger-than-expected cut in Saudi supplies to Asia, as well as speculation about the OPEC supply cut extension at its May 25 meeting.

The rebound strongly suggests the oil and commodities wobble of the past couple weeks was due to market dynamics and not some “canary in the coalmine” signal for ebbing global economic demand. It will also keep inflation watchers in bond markets and central banks on their toes as crude prices are still clocking year-on-year gains of more than 10 percent.

Ten-year U.S. Treasury yields are hovering just below 2.40 percent this morning, however, after failing to keep a toehold above that level over the past two days. Ten-year German bund and European yields are higher on Thursday.

All in all, this week’s soundings from the major central banks in Europe are decidedly neutral on policy direction, even if Fed futures see an 85 percent of a U.S. rate rise next month. European Central chief Mario Draghi’s appearance at the Dutch parliament on Wednesday acknowledged the significant improvement in the euro zone economy this year but was studious in restating his commitments to the existing policy course.

Bank of England chief Carney delivers his verdict later on Thursday, with the Bank’s "Super Thursday" set piece on its latest policy decision, meeting minutes and quarterly inflation report. Any BoE angst about the inflationary effects of sterling’s Brexit-related drop over the past year will have been tempered by the pound’s recent bounce as the June 8 UK election was called. And both the new-found stability of sterling, which may lower the worst inflation forecasts, as well as the political sensitivity of an election campaign will likely keep Carney as anodyne as possible in his guidance.

Sterling is steady against the dollar early Thursday, having struggled to recapture the $1.30 milestone over the past week. Euro/dollar was slightly higher in early trade, but still below $1.09. Even surprising neutrality from the Reserve Bank of New Zealand overnight knocked the kiwi dollar more than 1 percent.

Global equity volatility remains subdued near multi-year and multi-decade lows, meantime. The S&P500 eked out another small gain overnight even in the face of the latest row over U.S. President Donald Trump’s sacking of his FBI chief, which speaks again to the growing dismissal of political uncertainty as a major factor within financial markets.

Asia bourses were mostly positive across the board and European stocks are set for slightly higher open.

Editing by Larry King

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