This week, the ECB arrested the sell-off in peripheral bond markets without announcing very much at all, but there’s only so long that markets will be soothed by encouraging words about a possible anti-fragmentation tool. We think there is a significant risk that it will disappoint at the next meeting on 21st July. Meanwhile, the polls suggest that President Macron’s group is far from guaranteed to win a majority in parliament following the second round of voting this weekend. But in that event, support from centre-right parties should avoid a lame-duck presidency.
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