presidential election

On Friday, after it emerged that as part of Marine Le Pen's strategic vision for France, should she win, is a return to the French franc as well as redenomination of some €1.7 billion in French (non-international law) bonds, both rating agencies and economists sounded the alarm, warning it would "amount to the largest sovereign default on record, nearly 10 times larger than the €200bn Greek debt restructuring in 2012, threatening chaos to the world financial system on top of the collapse of the single currency."

• 'Trump trades' on boost to economic growth come back with a bang (Reuters)
• Trump's national security adviser Flynn trying to survive crisis (Reuters)
• White House Is Sifting Options on Immigration Ban (WSJ)
• North Korean Nuclear Ambitions to Be Defining Issue for Trump (BBG)
• Netanyahu opposes Palestinian state, Israeli minister says ahead of U.S. visit (Reuters)
• Speed Limits on Trump’s Infrastructure Drive: Federal Laws, Rare Species and Nimbys (WSJ)
• Germany’s New Trump-Critic President Sees Stormy U.S. Ties Ahead (BBG)

European and Asian stocks, S&P futures, bond yields, the dollar and commodity metals are rose, in some cases making new all time highs, lifted by the latest reemergence of the "Trump trades" as hopeful investors once again bet that the U.S. president's tax reform plans will boost economic growth and corporate profits, despite another warning from Goldman that the president's fiscal plan is about to be derailed.

Top White House aide and policy adviser, Stephen Miller, sidestepped repeated chances during Sunday news shows to publicly defend embattled National Security Adviser Michael Flynn following reports that he engaged in conversations with Russian diplomat(s) about U.S. sanctions before Trump’s inauguration. The uncertainty came as Trump was dealing with North Korea’s apparent first missile launch of the year and his presidency, along with visits this week from the leaders of Israel and Canada.

With the December monthly TIC data due out this week, bond traders will be closely watching if the selling of US Treasuries by foreign accounts, and especially central banks, which as we have repeatedly shown for the past several months has hit record levels...

... will persist, with a focus on whether China's near record selling of US paper will persist.

However, this time the surprise may not be China, but its nemesis across the East China Sea, Japan.