The first round of the 2022 French presidential election was held on April 10, 2022. A second round will be held on April 24, 2022 between the first two candidates, Macron and Le Pen. No president has been re-elected since the 2002 French presidential election. If Macron is re-elected on April 24, he will become the first president after Jacques Chirac to continue his second term.
The unofficial results of the first round show Macron 27.6% and Le Pen 23.4%. Although the vote rates are close and Le Pen has closed the gap as predicted, Macron has a high chance of taking the lead on April 24 with the distribution of the votes from the other candidates.
The math of the votes will be as follows: Apart from Le Pen, the other far-right candidate Zemmour will have 7.1% of the votes to go to Le Pen. The choice of those who voted for other centrist candidates will be Macron. The distribution of Melenchon, which received 22% of the votes, which will create the decisive margin. Melenchon is an ultra-leftist candidate... So it is not normally expected from his base to support Le Pen. However, the rate of votes of the centrist parties in France has decreased in recent years. This creates a certain amount of risk. Still, it seems unlikely that this will create an arithmetic that will raise Le Pen above 50%.
Results of the French presidential election, 1st round… Source: Exit polls
You can see the development of the French – German 10-year bond yield spread in the chart. The spread, which widened before the elections, has shown a greater opening in the last 2017 French elections (again, where Macron and Le Pen compete) and in the 2020 Covid crisis. The re-election of Macron on April 24 or the high probability of being elected will loosen the spread a little. The main issue for European bonds will be the degree of exposure to the Russian crisis and the divergence to be experienced with the US bond yields. Adding China's Covid shutdowns to the equation causes asymmetry in the bond market. Therefore, rates will not move in the same direction and we will see a US-German interest spread that is compatible with a more proactive Fed against inflation and a more cautious ECB. The risk from the French elections seems to be minimal for now.
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