France‘s Autumn of Uncertaint

The French government is unable to get the country's finances under control. Presidential elections will be held in 2027. The center is crumbling, and the political fringes are reaching for power. Recently, protests have broken out in many cities, including acts of arson and looting. The financial markets reacted with alarm, and government bond yields rose.

France is indispensable to the EU and, therefore, to the euro and. What happens there has far-reaching consequences - including for monetary policy. The problems in Paris are not making it any easier for the ECB to combat inflationary pressures in the eurozone. She'll do it anyway.

The situation is similar in the U.S. - while the president would like to see low interest rates, the Fed must respond to inflation. You can't do both at the same time. The markets are likely to remain volatile in the final weeks of the year.