Marcus Ashworth is a Bloomberg Gadfly columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.

The pollsters got it right -- it will be Emmanuel Macron versus Marine Le Pen fighting the run-off for the French presidency on May 7. Bonjour, risk. 

The single currency has already leapt by 2 percent to a five-month high in Asian trading. Bond markets are set to follow with gains, and it's not just going to be France that benefits. As this election is the most important political event this year for the euro-area, spreads on the debt of the region's peripheral countries should tighten.

But much of the fixed-income juice has already been squeezed. The markets had already partly priced this result in, as French debt outperformed German bunds for most of last week -- the benchmark 10-year spread tightened in 13 basis points. Those gains could be repeated at the open of trading Monday morning but that might be the end of it.

En Marche
Macron's success into the second round should see "le spread" tighten further
Source: Bloomberg
Bloomberg has changed benchmarks but for comparison purposes the old French 10-year benchmark shows a clearer picture

The yield curve will likely flatten, as risk on will drive longer-end yields down faster. Macron getting a higher share of the vote than Le Pen should further fuel a rally -- as it had been expected until fairly recently that Le Pen would win the first round.

The focus for the short end is a different matter. The question here is how much longer rates can stay negative in Europe. The hawks on the European Central Bank may well use this Thursday's meeting to argue that rates should be normalized sooner, though an actual move is very unlikely this week.

Le Curve
Now that risk's back on, look for the French yield curve to flatten
Source: Bloomberg

At 1 to 7 bookmakers have Macron as a sure-fire certainty to win, with Le Pen a distant 7 to 1 chance. These are very long odds for a two-horse race. It certainly makes sense as the majority of the political spectrum, including third-placed Francois Fillon, has already started to rally round the centrist Macron rather than the extremist Le Pen. 

Euro Hearts Macron
Asian trading takes the single currency to new highs for the year
Intraday times are displayed in ET.

Markets will want to see not just that Macron wins, but that he can govern effectively before "le spread" between France and Germany can return to the core levels of 20 basis points, which haven't been seen since the summer. The National Assembly elections are in June, and with his En Marche! movement never having contested any elections before, Macron is going to have to unite the political spectrum in an unprecedented fashion. A relief rally, certainly, but that doesn't mean all the political angst has evaporated.

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

(A previous version of this column was updated with later results.)

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Marcus Ashworth in London at

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Jennifer Ryan at