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.

A bigger margin of victory for Emmanuel Macron in the French presidential election has not translated into much of an initial gain for the euro -- and the same seems likely for French government bonds when trading starts on Monday. All hail the efficiency of markets.

Gallic Shrug
The euro makes little headway versus the dollar in early Asian trading
Source: Bloomberg
Intraday times are displayed in ET.

Spreads to German debt are almost back to where they were in October. Further tightening now that political risk has been dialled down may be brief, as the return to more normal markets means not just revived demand for French assets, but larger supply as well. And this will keep a lid on any spread out-performance for France.

How Low Can You Go?
Macron's victory is already mostly priced into the French/German 10-year spread
Source: Bloomberg
French 10-year bond shown is the old benchmark as it shows more consistent history

The French Treasury will likely want to take advantage of lower yields by announcing a a new syndicated bond, probably in the 30-year maturity. All sovereign issuers have struggled to raise funding at the longer end of the curve this year -- investors nervous about the political environment have been reluctant to add duration. Italy and the European Financial Stability Facility, the European Union bailout vehicle, may then follow as they will also be keen to raise long-dated funds.

As EU political risk has now reduced, and given the pickup in both inflation and growth, the hawks on the European Central Banks's governing council will increase demands to end QE -- yet another reason to watch out for selling.

The single currency project is less at risk on Macron's big win, but markets may move swiftly on as reality sets in on the tasks ahead for the new president, not least the National Assembly elections coming up on June 11 and 18. French spreads to Germany are fully priced in already for the risk.

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

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Marcus Ashworth in London at

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