World banks offered investors to make money on elections in France

The world's largest banks have decided to make money on the upcoming presidential elections in France, essentially inviting investors to bet on one or another outcome of the vote. Bloomberg writes about this.

Thus, according to agency sources, Goldman Sachs and Deutsche Bank provide clients with access to “baskets” of French bonds, which allow them to make a profit in the implementation of various political scenarios or to hedge the corresponding risks.

We are talking about the ability to open long or short positions on such packages of assets, even without owning the bonds themselves directly, but by gaining access to them, for example, using the so-called total return swaps organized by banks.

Elections in France will take place in April 2027, and markets are very sensitive to political news. In particular, in the summer of 2024, Emmanuel Macron’s decision to call early elections due to the failure of his party in the elections to the European Parliament collapsed the CAC 40 index. Against this background, already at the beginning of the year, European officials were thinking about speeding up the search for a successor to the head of the European Central Bank (ECB), Christine Lagarde, and avoiding the need to resolve the issue of replacing her with the successor of Macron, who is leaving the Elysee Palace, who will most likely turn out to be representative of the right opposition.