Deutsche Bank

Euphoria Returns: European Stocks Soar, Dax Hits Record; S&P Futs Surge In "French Relief Rally"

Risk is definitely on this morning as European shares soar, led by French stocks a new record high in Germany's Dax, and S&P futures up 1.2% after a "French relief rally" in which the first round of the country’s presidential elections prompted investors to bet that establishment candidate Emmanuel Macron will win a runoff vote next month. Asian stocks also surged, expect for China, which suffered its biggest drop of the year, down 1.4%, ending the streak of losses no greater than 1% going back to December.

Deutsche Bank: "It Was Good While It Lasted"

"It Was Good While It Lasted: Sit back, relax, the bear market in bonds may be over. It would not be unreasonable to expect at least a 50 bps decline from peak to trough in G3 yields following a peak in yield momentum."

Frontrunning: April 21

  • Attack overshadows last campaign day in France (Reuters)
  • Paris Gunman Was Questioned by Police in February (WSJ)
  • French PM knocks Le Pen, Fillon stance on security after Paris shooting (Reuters)
  • Battle zone scenes at Paris Champs Elysees (Reuters)
  • In ‘Buy American’ Push, Trump Is Starting in a Hole (WSJ)

"The Nightmare Scenario" And Everything Else: The Full French Election Matrix

With the start of the French election just days away, investors are contemplating a "nightmare scenario": a choice between far-left and far-right candidates.  Currently, polls are very close, with four candidates in the 18-24% range of voting intentions. Given the  polls’ margins for error, six permutations look possible for round 2.

SocGen: "The Pound Short Covering May Just Be Starting"

"The possibility of a hard Brexit has already been discounted by the market, but the larger parliamentary majority currently implied by the polls would strengthen the UK government's negotiating position domestically. The market is now assigning better odds to a post-Brexit EU-UK trade agreement, and thus the worst may be behind us and cable short covering may just be starting."

Is A Le Pen - Melenchon Second Round Possible: A Concerned Deutsche Bank Answers

Melenchon’s rise in the polls has been one of the key market drivers since the end of March. Further decline in Hamon’s votes is unlikely to support Melenchon to the same extent as it did in the last three weeks. However, the more important point is that the risk around the first round persists as (a) the top 4 candidates are within the historical margin of error and (b) the high level of undecided voters increases the uncertainty of the outcome.

Global Stocks Slide As Iron Ore Crashes; Pound Jumps After UK Calls Snap Elections

European stocks slide  s traders return from a 4-day Easter holidays, Asian equities likewise drop pressured by the ongoing rout in iron ore, while U.S. stock-index futures point to a lower open. British markets were roiled after U.K. Prime Minister Theresa May said she would seek an early election on June 8. The FTSE 100 droped 1.3%, on the news, hitting the lowest since Feb. 24

Bond Bears Battered To 5-Month Lows But Rate-Hike Bets Top $3.2 Trillion

Since their peak 'shortedness' in mid-January, US Treasury bond bears have covered 500,000 10-year-equivalent contracts, reducing the net speculative short to its lowest since before Thanksgiving 2016. At the same time, however, Eurodollar shorts (bets on Fed rate hikes) have soared to a new record high (over $3.2 trillion notional).