LIVE MARKETS-French scenarios by UBS
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FRENCH SCENARIOS BY UBS
Markets are digesting the fallout from France's confidence vote, which led to the resignation of Prime Minister Francois Bayrou.
UBS says the key to keeping volatility in check lies in how quickly President Emmanuel Macron picks a successor that can survive a censure motion. "Delays are politically and economically untenable," strategists at the Swiss bank say.
They outline three main scenarios.
The most market-friendly one is a non-censured coalition, which would require cross-party agreement and could see bond spreads narrow and French financials rally.
A second option, the consensus negotiator, proposed by former PM Attal, may reassure investors at first, but leaves uncertainty around the final nomination.
The least favourable is a caretaker government, should no viable coalition emerge. UBS says this could prolong instability and resemble the kind of market reaction expected in the case of snap elections.
The week of October 6, when the 2026 budget bill is due, is likely to be decisive, UBS says, potentially marking a turning point for political clarity and market direction.
(Danilo Masoni)
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