Le Pen narrows Macron lead in polls, risk premium and volatility soar
French presidential candidate Marine Le Pen managed to narrow the gap between her and front-runner Emmanuel Macron a little, the results of a new poll revealed, sending the country´s risk premium sharply higher - albeit on thin trading volumes - at one point during the session.
Going into the first round of voting, on 23 April, Macron, a former economy minister, was now tied neck-and-neck with the former Prime Minister, Francois Fillon, at 20.0%, the results of a new poll from Opinionway showed.
Meanwhile, Le Pen was still in the lead with 27.0% of voters indicating they would back her, as had been the case for several months.
However, Macron was now only seen coming out on top in a second round of voting - scheduled for 7 May - by 58% to 42%, against as much as 62% in previous tallies.
According to Market News International, the reason why Macron had slipped in the polls were his comments equating France´s colonial past in Algeria with "crimes against humanity".
In a hypothetical run-off vote between Fillon and Le Pen, the former was seen winning by 56% to 44%.
As of 1346 GMT, the yield on France´s benchmark 10-year sovereign bond was higher by four basis points at 1.07%, albeit well off from its intraday highs of 1.14%.
Speculation around left-wing alliance stokes losses in French debt, Le Pen on the defensive
The yield on similarly-dated 10 year bunds was flat at 0.30%, down from an intra-day high of 0.33%.
Ten-year French sovereign bonds also underperformed their German peers during the previous session, with yields rising by two basis points, whereas those on Bunds declined by 4.7 basis points.
That followed news that French Socialist presidential contender Hamon and far-left rival Melenchon had talked about a possible combination of their two candidacies.
Hamon had also tabled the possibility of an alliance with the Greens.
Economists at Deutsche Bank believed an alliance between Hamon and Melenchon would be difficult to build in practice.
Nonetheless, while such a result would lower the chances of Le Pen even making it to the second round it would also aide her odds should she manage to do so, Deutsche Bank said.
"At the same time it would also increase market volatility around the French Presidential election," Jim Reid at Deutsche Bank said.
On a related note, over the weekend Hamon was quoted as saying "he would not run after" Melenchon, Reid said.
In parallel, Le Pen was on the defensive was put on the defensive at the weekend following a report that she provided aides with fake parliamentary jobs.