The French election ended with an unexpected victory for the left. Before election day, many polls predicted that Marine Le Pen's right wing would win, but the result shows only third place. The leftist alliance won the most seats in the parliament (188), and Macron's centrists (161) also won an unexpected number of seats, joining forces against the extreme right.
However, the basic thesis remains unchanged – no party has won the 289 seats needed for an outright majority, and a hung parliament is the most likely scenario at this point. It should also not be forgotten that the leftist alliance is made up of a wide range of leftists, from the left of the center to complete socialists, so disagreements are possible both between parties and within them. French CAC 40 index futures showed slightly negative sentiment (-0.6 percent), while the euro weakened slightly against the US dollar. The spread between French and German bond yields remains at a high level, reflecting the country's still uncertain political situation in the eyes of investors.
The US labor market is showing signs of weakness. June labor market data show that unemployment rose from 4 to 4.1 percent. Also, although more jobs were created in June than expected, revised data from previous months show that the overall employment situation is worse than previously expected. For now, the labor market is slowing down a bit and is still far from recession, but the historically deteriorating situation has a tendency to continue. Among other good news for inflation, wage growth slowed to 3.9 percent, in line with market expectations. This news further strengthened expectations that the Fed will start lowering interest rates – the probability that interest rates will be lowered no later than September rose to 80 percent. Stocks jumped to another record trading session at the time, with the S&P 500 up 0.5 percent and the NASDAQ up 0.9 percent. The head of the Fed, J. Powell, will speak at the US Capitol this week, where he will have the opportunity to present an updated opinion on the state of the country's economy.
