QS has been short 10yr French Sovereign debt since July 3, 2024. No change in this conviction but it may be a slower ride.
It is early days. But the most likely upshot of the constitutional crisis caused by the Le Pen conviction is that there will not be legislative elections in France in summer 2025. Therefore, there will not be a populist government. And French sovereign bond yields will not blow out.
What will happen is this. If populist anger at the Le Pen conviction runs high, the Bayrou government will fall - only to be replaced by another Macron appointed, ineffective government. And Macron’s plan will be to continue doing just that until 2027 when he believes that “anger” will have subsided, and the RN will be weakened by its youthful leader Jordan Bardella. Then, with no Marine Le Pen contesting the Presidential election, Macron hopes to be replaced by someone of his own ilk or party.
So no reform. The economic rot will continue, and this will continue to be reflected in the relative and absolute performance of French sovereign debt.