The Monday Note

  • The FTSE 100 closed on Friday at 7,188.3, which was little changed on a week earlier. Ten year Gilt yields hardened to 1.36%, down from 1.47% a week earlier.
  • The US economy saw 227,000 jobs created in January, well ahead of the consensus forecast of 175,000. However, unemployment rose slightly from 4.7% in December to 4.8%.
  • The previous front-runner in the French Presidential election, Francois Fillon, dropped to third place in a recent poll. At a rally on Sunday, National Front leader Marine Le Pen promised a referendum on EU membership.
  • The Eurozone recorded a 0.5% increase in GDP in Q4, which was better than expected and higher than the Q3 figure of 0.4%.


Chief Economist comments:

The pundits who reassured us that Francois Fillon would beat Marine Le Pen in the French Presidential contest are now insistent that Emmanuel Macron is a shoe in. Remember when the UK was sure to vote to stay in the EU, and Trump would never make the White House? Assuming there is no risk of another populist election victory is a mistake. France walked out of NATO for 43 years, and for six months broke off all contact with the EEC (the EU’s forerunner) in what was known as ‘the empty chair crisis’. The political roller coaster continues, but the economy is growing steadily despite the instability. Are we overestimating the importance of the politics?

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