French equity markets (^FCHI, ^SBF120) are seeing moves higher after the far-right National Rally party secured a first-round lead in France's snap election.
Goldman Sachs Asset Management fixed income strategist Gurpreet Garewal discusses the likelihood of contagion from French equity and bond markets and the European Central Bank's (ECB) outlook on inflation.
"Inflation expectations are anchored. But there are risks. On one hand, if you have tightening in financial conditions related to political uncertainty, that could actually necessitate a more dovish policy stance," Garewell tells Madison Mills on Catalysts. "But on the other hand, even though investors may have become cautious on French assets, consumers are still actually very constructive on Europe as a tourism destination... and that could present upside risks to the inflation outlook, at least in the near term, through core services, inflation and tourism related categories like hotels, airfares and so forth."
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This post was written by Luke Carberry Mogan.