Europe

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.

The German polls have officially closed, and the first exit polls numbers come in, confirming the expected fourth victory for Angela Merkel's CDU/CSU, however getting a unexpectedly low 32.5% of the vote, which according to Europe Elects was the worst result for Merkel's CDU/CSU (EPP) since 1949. Merkel's main challenger, the SPD, got 20%, also its worst result since Nazi era 1945; furthermore, the SPD has said it plans to enter the opposition, collapsing the current CDU/CSU-SPD "grand coalition." 

With polls closing shortly, Germany voted on Sunday in the country's federal elections, with long-serving Chancellor Angela Merkel looks certain to win a historic fourth term in office (see full preview here). Absent last minute drama, the poll is also expected to see the right-wing Alternative for Germany (AfD) entering parliament for the first time. The only outstanding question today is which other party or parties will join the chancellor’s Christian Democrats coalition in her new government

Two weeks ago, one of our favorite derivatives strategists, BofA Barnaby Martin wrote something we have said for years: "QE has been the most effective way for CBs to 'sell vol'", arguing that accommodative monetary policies across the globe amid QE have "clearly supported a strong rebound in fixed income markets." This should not be a surprise: as Martin calculated, there is now some $51 trillion at risk should rates vol spike, not to mention countless housing bubbles that have been created since the financial crisis where the bulk of middle class wealth h

With just hours to go before the German election, Angela Merkel looks set to remain Chancellor for a record fourth term. This suggests largely unchanged economic policies, focusing on fiscal prudence and conditional steps towards European integration. However, with new political winds clouding the outlook for globalization, trade relationships and security in Europe, and with lingering questions on the sustainability of the EMU, Germany can ill afford to rest on its laurels, according to SocGen.