Two big events down, many, many others more left to go. Below is a full European event calendar for the rest of May and June. Just like in 2011, Europe got unhinged around this time and things peaked by November when only a coordinated global intervention saved the world courtesy of $1.3 trillion from the ECB, expanded FX swaps from the Fed and a PBOC rate cut. Only unlike in 2011, with Silvio and Sarko both now gone, the roster of political scapegoats is getting very, very thin. Whose head wil the vigilantes demand next? We will find out over the summer and fall, which promise to be even more exciting than last year.
Full events for the remainder of H1 via Deutsche Bank:
- 6 May: Second round of the French presidential elections (see 22 April entry). The results of the 22 April first round suggest that the Socialist candidate, Francois Hollande, is on course for victory.
- 6 May: Greek general election. Polls close at 7pm local time, with exit polls released at the same time. Real-time results will start streaming approximately an hour later, and the first reliable country-wide estimate should be available around 10pm local time. If the results are a close call, the final outcome may not be known until the early hours of Monday. The last batch of polls was published on April 20th, ahead of the poll blackout period. These pointed to a picture that has remained remarkably consistent throughout the last two months: a large number of undecideds (~20%), record-low support for the two traditional governmental parties (New Democracy and PASOK) and rising extremes on both the left and right. The ultimate result is sensitive to how the undecideds vote. Assuming a proportional allocation, New Democracy and PASOK should be able to secure a decent majority. Polls using a more sophisticated allocation technique point to an inability to form a government however. The bottom line is that the result is too close to call.
- 6 May: German state election in Schleswig- Holstein. On recent opinion polls, the current conservative-liberal coalition will lose its majority despite the fact that the liberals will most likely exceed the 5% threshold to enter parliament again. A CDU/SPD grand coalition is a possible outcome. However, it is open which of the two parties will receive the most votes and subsequently appoint the leader of the grand coalition government.
- 6 and 7 May: First round of Italian local elections (second round on 20 and 21 May). This will be a first test to see the degree of electoral support to those parties backing Monti’s government – nine million people are called to the polls (about a fifth of Italy’s total electors). The relative performance of the Northern League and Berlusconi’s PDL could be an interesting insight. The two parties, which formed the core of the previous government, were unable to prevent and control the sovereign crisis. Since then the PDL decided to support Monti’s government, contributing to avoid early elections, which would likely have had disastrous consequences for Italy. On the contrary, the Northern League opted to further increase its populist message and move to the opposition against Monti.
- 7 May: Germany to debate ESM. Parliamentary public hearing on the ESM Treaty.
- 8 May: Greece auction. Bills.
- 8 May: EFSF auction. Bills.
- 11 May: European Commission to release spring economic forecasts.
- 11 May: Italy auction. Bills.
- 13 May: German state election in NRW. The vote in NRW can be seen as an important test of the electorate’s political mood. The polls indicate that the SPD (around 38%) and the Greens (about 12%) may win a stable majority. The CDU has support levels at about 33% in the polls. NRW’s CDU party leader Norbert Röttgen may well achieve some 35% (roughly in line with national averages) but the Greens clearly have no preference for governing with him. Whether the liberals can clear the 5% hurdle remains to be seen. The election in NRW is the second-last state-level test before the national election in mid-
September or October of 2013. In January 2013, state elections in Lower Saxony will expose the conservative-liberal camp to new risks (see German political update, Focus Europe, 23 March 2012).
- 14 May: Spain auction. Bills.
- 14 May: Italy auction. Bonds.
- 14-15 May: Eurogroup and ECOFIN finance ministers meetings.
- 15 May: Greece auction. Bills.
- 15 May: Flash Estimate EU and euro area GDP. Eurostat to publish preliminary estimates for Q1 2012 GDP.
- 17 May: Spain auction. Bonds.
- 22 May: Spain auction. Bills.
- 25 May: German parliament vote on Eurozone ‘Fiscal Compact’. The Fiscal Compact to strengthen budgetary discipline within the euro area will require a two-thirds majority in both the Bundestag and the Bundesrat, the upper house. Until now, cooperation between the coalition parties and the opposition has been smooth, underlining the pro-Europe sentiment. The SPD and the Greens are insisting on taxation of the financial sector and a growth package in return for their support. The latter fits into the broader debate on a European level, including modification of structural funds or even new financing instruments such as project bonds. However, we do not feel this will pose a risk to the Fiscal Compact being approved as the opposition has no interest in sending such a signal to the EU. Most probably the compact’s approval will be linked to i) deciding on a growth pact by the end of the year and ii) agreeing on a roadmap for introducing additional taxation on the financial sector, or at least give the go-ahead for national solutions (see article on German politics in Focus Europe on 23 March).
- 28 May: Italy auction. Bonds.
- 29 May: Italy auction. Bills.
- 31 May: Irish referendum on Euro zone ‘Fiscal Compact’. A recent opinion poll put the support for the Fiscal Compact at 47% (down 2pp), the No vote at 35% (up 2pp) and 19% Don’t Know. This equates to a 58%:42% Yes:No ratio when the undecided votes are excluded. The concern is the still high level of undecided voters. Although Ireland is making good progress through its EU-IMF adjustment programme — the sixth review was recently passed successfully — a ‘No’ to the referendum could compromise Ireland’s access to ESM funding should a second loan programme be required. Although a second referendum is a theoretical possibility (Ireland has a history of rejecting EU referenda before accepting), taking away the safety net could be a significant blow to Irish bonds.
- 6 June: ECB Governing Council meeting, followed by interest rate announcement and news conference.
- 6 June: Portugal auction. Bills.
- 7 June: Spain auction. Bonds.
- 10 June: French legislative election (first round). Elections to entirely renew the deputies in the National Assembly (lower house of parliament). A risk is that the socialist party alone fails to secure an absolute majority and has to depend on the support of the radical left, which could push to try to transform what we hold for pure campaign rhetoric in actual legislation. However, it would be wrong to simply replicate Melanchon’s score in the first round of the presidential election into the number of deputies the radical left would secure, as the “personal factor” was important in Melanchon’s strong performance and as the “two rounds” majority system of the parliamentary election should favour the socialists.
- 12 June: Greece auction. Bills.
- 13 June: Italy auction. Bills.
- 14 June: Italy auction. Bonds
- 17 June: French legislative election (second round) See 10 June entry
- Mid-June: European Commission proposals on failed banks. The EC is due to present proposals for a bank crisis resolution scheme, potentially including plans for creditor writedowns, before the G20 leaders’ summit on 18-19 June. The proposals being worked on have been reported not to directly involve the euro zone’s EFSF and ESM funds.
- 18-19 June: G20 Leaders Summit, in Los Cabos, Mexico. Gathering of the leaders of the world’s twenty biggest economies. European Commission’s plan to resolve failed European banks among the issued to be discussed (see the entry above).
- 19 June: Spain auction. Bills.
- 19 June: Greece auction. Bills.
- 21 June: Spain auction. Bonds.
- 21-22 June: Eurogroup and ECOFIN finance ministers meetings.
- 26 June: Spain auction. Bills.
- 26 June: Italy auction. Bonds
- 27 June: Italy auction. Bills.
- 28 June: Italy auction. Bonds.
- 28-29 June: European Council meeting. This is the meeting of the EU heads of state and government.
And a global debt issuance calendar for the next two weeks: