08.09.25 - No-Confidence Vote in France

France faces renewed political turmoil as a no-confidence vote on Prime Minister François Bayrou comes to the floor. The vote will take place tonight 7.00pm CET.

Markets: markets have already started to price in some risks.

• French government bond yields higher with increased risk premium

• French equities lagging broader European indices during recent days

My View: Political uncertainty is once again fueling volatility and putting fiscal stability into question. The French debt issue has returned to the spotlight, and in Europe’s second-largest economy the repercussions stretch well beyond national borders. With debt levels already under scrutiny and fiscal discipline difficult to enforce in a fragile political environment, pressure on French assets is unlikely to ease any time soon.

For the broader European economy, the timing is far from ideal. Growth remains sluggish, confidence fragile, and renewed instability in France risks undermining eurozone cohesion. Until greater clarity emerges, investors should brace for continued swings in both bonds and equities.

I continue to hold a cautious stance on Europe, as the overall economic backdrop remains tilted to the weaker side.

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