Markets

Elaine He oversees Bloomberg Gadfly's data visualization work in Europe and also pursues her own columns combining business and markets coverage. Before joining Bloomberg, she was a graphics editor at the Wall Street Journal and the New York Times.

That slack-jawed look of surprise investors were making for most of 2016? It's not going anywhere. Political volatility is here to stay.

What Frightens the Bond Vigilantes?
Populism and rising yields are bond investors' top concerns
Source: BofA Merrill Lynch

For almost a third of high-grade credit investors, populism in politics is the biggest concern for the next 12 months, according to a Bank of America Merrill Lynch Global Research report published on Dec. 19. In a similar survey in October, before Donald Trump's surprise election win, fewer than one in 10 had put it as their main worry.

They have reason to be concerned. The Netherlands, France and Germany all hold national elections in coming months. With unemployment and stagnant wages fuelling voters' antipathy to immigration, there's the risk of a populist upset. These charts show the gains parties from Germany's AfD to France's National Front have made in recent opinion polls.

Right Surge
Geert Wilders' Freedom Party has regained its lead in the Dutch opinion polling
Source: Peil.nl
Neck and Neck
French conservative and nationalist parties are outstripping the left in opinion polls
Source: polling averages
Note: Data show monthly polling averages from BVA, CSA, Elabe, Future Thinking, Harris Interactive, Ifop, Ipsos, Kantar Sofres, Odoxa, OpinionWay, TNS Sofres
Coalition Forces
The AfD is taking a growing share of the vote from all parties, something that could make it harder for Chancellor Angela Merkel's CDU/CSU to form a coalition after the election
Source: Wahlrecht.de
Note: Data show monthly polling averages from Allensbach, Emnid, Forsa, Forschungsgruppe Wahlen, GMS, Infratest dimap, INSA and IPSOS

None of these populist challengers may win -- Germany's constitution is designed to promote consensual coalitions. But the severity of the perceived threat can still move markets: look how the pound rose and fell with chances of a remain vote.

And none of what caused the volatility of 2016 is going away. There's still a Brexit to be negotiated, and Trump takes office on Jan. 20. Buckle up.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Elaine He in London at ehe36@bloomberg.net

To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net