The first sellside comments on today’s German elections – which as a reminder was a disaster for the German establishment, following the worst showing for the CDU/CSU since 1949 and the worst result for the SPD since 1945 with support for both parties tumbling since the 2013 elections…
… have started to trickle, in and according to SEB, the result is ‘less market-friendly’ than expected.
Quoted by Bloomberg, SEB cross-asset strategist Thomas Thygesen said that the result is a victory for Angela Merkel as expected, but her mandate going into negotiations about deeper euro integration does not look quite as strong.
“It looks like marginally less market-friendly than expected,’ Thygesen said adding that ‘I’d say this is in line with our expectation that the euro would pause around $1.20 vs dollar and then maybe retrace a couple of percent over the autumn.’
‘The AFD above 10% suggests that even here the stakes are high: if the European project doesn’t fly this time in a way that voters like, Germany could look less politically stable in a few years.’
A note from Pantheon’s Claus Vistesen is similarly concerned about the election outcome and the viability of the upcoming coalition:
This post was published at Zero Hedge on Sep 24, 2017.