Macron Faces Mounting Pressure To Find New French Prime Minister

Political

Summary:

(Dec 9): Key allies of Emmanuel Macron are heaping pressure on the French president to name a new prime minister quickly, with t

(Dec 9): Key allies of Emmanuel Macron are heaping pressure on the French president to name a new prime minister quickly, with time running short to pass a stopgap spending bill before the end of the year.

Francois Bayrou, a veteran centrist politician who’s been cited as a possible premier, warned over the weekend that “we can’t continue like this.” Yael Braun-Pivet, the head of the National Assembly and a member of Macron’s party, called on the president during a Sunday radio show to name a new prime minister “in the next few hours.”

The sense of urgency comes days after Marine Le Pen’s far-right National Rally joined a left-wing coalition to topple the government, leaving France’s political system in disarray. Macron said he would name a new premier in the “coming days” who would then pass an extraordinary spending bill before mid-December to keep the country running.

The president met with key political chiefs Friday to begin the process of landing on a prime minister who could last longer than the outgoing premier, Michel Barnier. Macron held discussions with leaders from his own party as well as with center-right politicians and Socialist lawmakers.

On Monday, Macron will meet Communist and Green lawmakers. He hasn’t indicated if he’ll consult with the anti-migration National Rally, which is the largest single party in the lower house of parliament and played a key role in bringing down Barnier’s government.

National Rally President Jordan Bardella urged Macron to meet with his party to chart a way forward.

“I ask to be received with Marine Le Pen so that we can present our red lines,” Bardella told France 3 TV on Sunday. “You can’t pretend we’re not here.

In an interview with Bloomberg on Wednesday, Le Pen said a new budget could be passed “in a matter of weeks” if the government fell. She said the next prime minister would have to narrow the budget deficit more slowly.

In an address to the French people on Thursday, Macron signaled an aggressive approach to the far-right and left forces that brought down the government, saying that they “voted for disorder” and that “they voted not to create but to break down.”

France is adrift at a critical moment with Donald Trump aiming to drive a resolution to the war in Ukraine, the European Union locking down new trading relationships with South America’s biggest economies and the bloc’s biggest companies struggling to compete with their US and Chinese rivals. Macron met with Trump on Saturday when the US president-elect was effectively the guest of honor at the reopening of Notre Dame cathedral.

The uncertainty in Paris over the future of Barnier’s government and its budget fueled investor concerns about the country’s already stretched public finances in recent weeks. Under selling pressure, the state’s borrowing costs compared to peers rose at one point to highs not seen since the euro zone’s debt crisis more than a decade ago.

However, markets calmed as opposition parties indicated willingness to be more cooperative after the collapse of Barnier’s government. French government bonds rallied for a fourth day on Dec. 6, driving down the 10-year yield over German equivalents.

Macron’s troubles began last June when he called a snap election ostensibly to shore up his support after a catastrophic Europe-wide vote. The plan backfired, delivering a National Assembly split into three irreconcilable blocs: a strong left-wing coalition, a smaller center that backed Macron and an expanded nationalist group led by Le Pen.

The result of the June election made Le Pen the pivotal power broker in the lower house of parliament, giving her National Rally the ability to short circuit the government. Which is exactly what they did when it came time to pass the 2025 spending bill.

Barnier’s budget legislation included about €60 billion ($63.4 billion) of tax hikes and spending cuts to bring the deficit to 5% of economic output from 6.1%, closer in line with stricter European Union regulations. Even though Barnier made multiple concessions to Le Pen, she still toppled his administration.

Barnier became the shortest-serving prime minister since the French Republic was founded in 1958.

Whoever becomes the next prime minister of France will have to deal with the same parliamentary calculus as Barnier, and will likely face the same hurdles to passing a full budget for 2025.

While Bayrou’s name has been floated as a possible premier, it could also be someone from the outgoing cabinet, such as Sebastien Lecornu, in charge of defense, or Bruno Retailleau, interior minister. Bernard Cazeneuve, a former prime minister for Socialist President Francois Hollande, is also often cited.

“If I can help in any form to get out of this, I will do it,” Bayrou told reporters over the weekend.

Source: Theedgemarkets

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Warren Takunda

Economic

Pound Sterling has now risen for two consecutive weeks against the Dollar as it looks to claw its way out of a multi-week selloff that followed a spurt of above-consensus U.S. economic growth and the election of Donald Trump.

As the below chart shows, those claws are dug into the descending trendline, and a conclusive break above the line would be the latest, albeit tentative, signal that the Pound is in a near-term rebound:

Pound to Dollar Week Ahead Forecast: Recovery Grows in Confidence_1

Above: GBP/USD at daily intervals with descending channel and 200-day moving average annotated.

GBP/USD is again trading above the 21-day moving average, which would be the first key moving average that needs to be broken if the outlook is to flip to something more constructive.

The Relative Strength Index (lower panel) has turned constructive by rising above 50 and is still pointing higher, which advocates for near-term advancement.

However, the market is still below the more important trend lines, which are the 50- and 100-day moving averages. What is interesting, however, is that the 200-day moving average is close at hand at 1.2819, a level that appears to have provided resistance to Friday's attempted bounce after the U.S. job report.

We will watch this level closely, as a break above it would be an important technical development that favours further upside in the GBP.

More broadly, FX markets are currently experiencing a USD correction that can continue into the new year.

"The FX price action in recent days has highlighted the limits of the so-called 'Trump trade'," says Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole. "In addition, the fact that U.S. rates and UST yields remain close to their recent lows has become a key headwind for the USD."

GBP/USD investment bank consensus forecasts: The end-2024 and 2025 guide from Corpay has been released. It shows a sizeable uplift was made to the consensus forecasts for GBP/USD. Please request a copy here.

The U.S. Dollar ended Friday somewhat stronger following the release of the U.S. jobs report, although the strength was not significant. This suggests that the data release was largely in line with expectations.

To be sure, news that the U.S. economy added 227K jobs in November while the unemployment rate rose to 4.2% won't prevent the Federal Reserve from cutting interest rates again next week.

But there is one more major data release that will influence the Fed's decision: Wednesday's inflation release.

"The focus shifts to next week’s inflation print on Wednesday," says Dominic Schnider, Strategist at UBS Switzerland AG. "This marks the last important data point before the Federal Reserve meeting on 18 December."

The market expects headline CPI inflation to be 0.2% month-on-month and 2.7% year-on-year.

"Markets expect CPI, as well as the core measure, to remain broadly unchanged and see a 75% chance of a December rate cut. We think the Fed will lower rates by 25bps at the meeting, which would weaken the dollar into the year-end. Furthermore, the USD also seems to be consolidating from a technical perspective," says Schneider.

Should the inflation numbers beat expectations in a more convincing fashion, then the U.S. Dollar can stage a more meaningful rebound as the market would lose confidence in a December rate cut.

Pound Sterling sees some risk on Friday when UK economic output data is revealed.

Analysts think the economy contracted by 0.1% month-on-month in October. Anything deeper is likely to weigh on the Pound, as this would encourage investors to bet on more Bank of England rate cuts in 2025.

Anything stronger, and GBP could strengthen into the weekend. Also of interest on the day will be GfK consumer confidence data, where we will be looking for evidence of further consumer sentiment deterioration in the wake of the government's budget.

The big releases for the Pound come next week, when inflation and labour market figures are released. These figures should provide some finality to expectations for the December 19 Bank of England interest rate decision.

Source: Poundsterlinglive

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Alex

Commodity

Political

Crude oil prices began trade this week with a gain following the news that Islamist rebel groups had ousted Syria’s President Bashar Assad and taken over the country in a blitzkrieg-style offensive that lasted less than a month.

At the time of writing, Brent crude was trading at $71.54 per barrel, with West Texas Intermediate at $67.63 per barrel. The price gains were limited as pessimism about demand growth remained strong.

“The development in Syria has added a new layer of political uncertainty in the Middle East, providing some support to the market,” Mitsubishi UFJ Research and Consulting analyst Tomomichi Akuta told Reuters.

“But Saudi Arabia's price reductions and OPEC+'s production cut extension last week underscored weak demand from China, indicating the market may soften toward year-end,” Akuta added.

“Markets are largely pricing that the tensions in Syria will remain contained within its own space and the risks of a wider oil supply disruption remain low,” IG market strategist Yeap Jun Rong told Bloomberg.

Saudi Arabia said it would cut oil prices for January deliveries, reinforcing fears of an oversupply next year, as predicted by numerous forecast outlets. However, some analysts warn that oil demand is being underestimated and oversupply is being overestimated, which could result in a rude awakening at some point in 2025.

Last week, Morgan Stanley revised its Brent crude price forecast for 2025 upwards, saying the OPEC+ decision to delay production cut reversals would result in a smaller-than-expected supply overhang, even factoring in what has been widely perceived as weakening China demand.

“The action taken by OPEC+ eats quite heavily into the surplus that was expected over 2025. However, the extension and the slower return of barrels is not enough to push the market into deficit next year,” ING analysts said following the group’s decision, made last week.

Source: OILPRICE

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Warren Takunda

Stocks

London stocks were set to edge up at the open on Monday as investors eyed a week packed with central bank policy announcements.

The FTSE 100 was called to open around 11 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The European Central Bank (ECB), the Bank of Canada (BoC), the Reserve Bank of Australia (RBA) and the Swiss National Bank (SNB) will announce their latest policy verdict throughout this week and all - except the RBA - are expected to lower their rates.

"The BoC is expected to cut by 50bp while the SNB and the ECB are expected to announce a 25bp cut. Some investors are convinced that the ECB could announce more than a 25bp cut. Either it could go bigger with a 50bp cut, or cut by 25bp but shift their focus from inflation to economic growth. I believe that the second option is more plausible. If that’s the case, we should not see a significant selloff in the euro post-decision."

Earlier, data from the National Bureau of Statistics showed that consumer price inflation in China fell to a five-month low in November, slowing to 0.2% year-on-year from 0.3% the month before and falling short of expectations of 0.5%.

Core inflation - which excludes food and fuel prices - rose 0.3% in November, down from 0.2% in October.

In UK corporate news, GSK said the US Food and Drug Administration has agreed to look at data from its MATINEE study to support the regulatory review process to obtain a new indication for the use of its Nucala drug as an add-on maintenance treatment for patients with chronic obstructive pulmonary disease.

The study met its primary endpoint with the addition of mepolizumab to inhaled maintenance therapy, achieving a “statistically significant and clinically meaningful reduction” in the annualised rate of moderate/severe exacerbations versus placebo with patients treated for 52-104 weeks.

Early-stage science investor IP Group said it plans to increase its share buyback plan after raising £15m from the sale of minority holdings in several portfolio companies.

The company said it has agreed the sale of stakes of less than 10% each in nine portfolio companies across its balance sheet and managed funds to Lexham Partners.

All proceeds will go towards its share repurchase programme, which will rise to £45m, up from the £30m previously planned.

Source: Sharecast

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Justin

Commodity

Political

An alliance of Islamist rebels has taken over Syria, with President Bashar Assad fleeing the country for Russia. Per media reports, world leaders are currently watching the alliance, including an Al-Qaeda affiliate that has been designated as a terrorist group.

According to a Reuters report on the regime change in Syria, the event constitutes a major change in the course of Middle Eastern politics as it deprives Russia and Iran of a key ally in the region. Some observers have seen the takeover as a big win for Israel and Turkey.

The resurgence of Syrian rebel groups began in mid-November as Israel accelerated its attacks on Iran-affiliated groups in the country. The rebel forces appeared to have felt emboldened, not only because of Israel’s attacks on Iranian proxies in Syria, but also because Israel had severely weakened Hezbollah in Lebanon, and Hezbollah was a key force for maintaining Assad’s grip on power.

The situation remains quite uncertain despite hopeful reports from mainstream media suggesting the takeover would bring positive change to Syria and the Middle East. For starters, Israel is already moving in to take over the buffer zone separating the Israeli-occupied Golan Heights and the rest of Syria. The terrorist group designation of Hayat al-Tahrir al-Sham could also be a problem as this situation develops.

“This is a historic day in the history of the Middle East,” Israel’s Prime Minister Benjamin Netanyahu said on Sunday. “Together with the Defense Minister, and with full backing from the Cabinet, I directed the IDF yesterday to take control of the buffer zone and the dominant positions near it,” he said, adding “We will not allow any hostile force to establish itself on our border.”

Oil prices rose in response to the latest developments in Syria as the security of Middle Eastern supply returned to the spotlight.

Source: OILPRICE

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Warren Takunda

Economic

If you are wondering how markets have reacted to the stunning fall of President Bashar al-Assad in Syria, the answer is calmly. Gold and oil prices are up around 0.4%, but that's a modest move for such a rapid turn of events and there are no signs of a rush to safety. Maybe there's just too much going on in the Middle East for traders to know how to react.

It would certainly seem to be a bloody nose for Russian President Putin who has spent years propping up the Assad regime and stands to lose control of his only naval base in the Mediterranean.

Moscow claimed to have a deal to keep the base and its Hmeimim air facilities in Latakia province, according to a Kremlin source quoted by Russian media, while Russia's foreign ministry played down any immediate risk. But it was far from clear whether the rebels had agreed to such a deal. The loss of those bases would severely degrade Russia's power projection in the Middle East and Africa.

Political uncertainty was also a feature in Asia where South Korean stocks slid anew after President Yoon Suk Yeol survived an impeachment vote, only for prosecutors to name him as a subject of a criminal investigation over last week's martial law attempt.

South Korea's finance ministry was out early on Monday to reassure markets of all the support they needed, but the won still slipped towards two-year lows and stocks shed more than 2%.

Sentiment was further strained by a surprisingly sharp 0.6% month-on-month drop in China's consumer price index in November, stoking market mutterings that not enough was being done by Beijing to revive the economy.

Chinese leaders are set to spend two days this week in closed-door talks on next year's policy ambitions during the central economic work conference, but the suspicion is that nothing concrete will come of it.

Core U.S. inflation figures are due on Wednesday and a result above the +0.3% forecast would challenge the market's confidence in a December rate cut by the Fed. The implied probability is currently at 83% with a further 75 basis points of easing priced in for next year.

In that regard, it was a relief that President-elect Donald Trump said on Sunday he would not try to replace Fed Chair Jerome Powell upon taking office in January.

Of the central banks meeting this week, the ECB is seen cutting by 25 basis points and the BoC by 50 bps. The SNB could also go by 50 bps given how much it has been spending to restrain the Swiss franc. The scale of its intervention to sell francs for euros is likely the reason why the single currency is not testing parity on the U.S. dollar right now.

Key developments that could influence markets on Monday:

- Participation by ECB board member Piero Cipollone in Eurogroup meeting

- Bank of England Deputy Governor Dave Ramsden gives a speech on financial stability

- Euro zone finance ministers meet to assess their Draft Budgetary Plans

- Euro Zone Sentix Index for Dec

Source: Reuters

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ACY

Economic

Commodity

As 2024 concludes, the commodity markets face a unique blend of economic policies, geopolitical pressures, and evolving supply-demand dynamics. Here's a breakdown of the key developments shaping the landscape.

OPEC+ Strategy and U.S. Policy Shifts

OPEC+ has once again postponed its planned production hikes, extending cuts until April 2025. The decision comes amid persistently low oil prices, hovering around $73 per barrel, and a surplus expected in the first quarter of 2025. These cuts aim to stabilize the market and avoid oversupply during a seasonally weak demand period.

In the U.S., energy policy under the incoming administration emphasizes growth, including a push to increase domestic oil production by 3 million barrels per day. This initiative could reshape global energy markets, particularly as the U.S. accelerates approvals for LNG export projects to meet growing international demand. However, the benefits of these projects may not materialize until later in the decade.

Metals: Trade Disputes and Supply Challenges

The metals market highlights the interplay of geopolitics and resource dependency. Gallium and germanium, essential for advanced technologies, have become focal points in the U.S.-China trade tensions, with China imposing an export ban. This escalation reflects the strategic importance of critical materials.

Base metals, meanwhile, face constrained supplies, setting the stage for higher prices in 2025. Aluminum and copper are particularly strong performers, with demand outpacing supply due to infrastructure investments and energy transition initiatives globally.

Gold: Dual Drivers of Fear and Wealth

Gold continues its upward trajectory, driven by two key factors: fear and wealth. On the one hand, geopolitical uncertainties and rising fiscal deficits have reinforced gold’s role as a safe-haven asset. On the other, central banks in emerging markets and retail investors in Asia are bolstering demand, viewing gold as a hedge against currency depreciation and economic instability. Projections suggest gold could surpass $3,000 per ounce by late 2025, solidifying its status as a cornerstone investment for uncertain times.

China’s Corn Market Under Pressure

China’s corn prices have fallen to their lowest levels in four years due to poor weather damaging harvests and flooding the market with lower-grade grain. Farmers have struggled to find buyers, intensifying price declines. Despite government interventions like stockpiling, sluggish demand and weak economic conditions have limited recovery, highlighting the broader challenges facing global agricultural markets.

The commodity markets are navigating a challenging yet transformative phase. From OPEC+ strategies and U.S. energy policies to the metals trade war and agricultural pressures, 2024 has underscored the intricate interplay of economics and geopolitics. As we enter 2025, market participants must stay vigilant to these evolving dynamics, which are poised to shape investment strategies and global economic trends in the coming year.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

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