WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Fixed income safe-havens weakened in European trade on Friday pressured by global equity markets’ improved performance. On the flipside, French government bonds firmed on market uncertainty ahead of the first round of president elections on Sunday, April 23rd, especially following yesterday’s terrorism incident in Paris. The latest opinion polls continue to suggest that far-right nationalist Marine Le Pen and independent centrist Emmanuel Macron remain the key contenders for the second round on May 7th. However, the outcome remains highly uncertain and the prospect of the second round involving conservative Francois Fillon and/or eurosceptic far-left Jean-Luc Mélenchon who both trail behind the first two top candidates by 4-6ppts on average, cannot be ruled out given the high level of undecided voters, the risk of a relatively low voter turnout and the fragmentation of the political landscape. In FX markets, the USD gained some ground supported by Treasury Secretary Mnuchin’s comments that the US administration will unveil a tax reform plan “very soon” and expects it to be approved by Congress this year.
GREECE: The issue of the medium-term debt relief framework for Greece is expected to be discussed during the IMF/World Bank Spring Meetings that are taking place in Washington (April 21 – 23) between IMF Managing Director Christine Lagarde and German FinMin Wolfgang Shaeuble and more clarity may be gained on whether the Fund will financially participate in Greece’s bailout programme. ESM Managing Director reportedly stated that Greece could repay the IMF’s loans by utilizing unused ESM funds allocated to the country but in any case such a decision will not be made before the end of the programme. Greek government spokesperson Dimitris Tzanakopoulos reportedly stated yesterday that the institutions mission heads will likely return to Athens on April 25th.
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