The French Bond market threatens to become a crisis as yields widen and its’ politics look increasingly a zero-sum game. While we’ve been watching the antics in DC and the price of oil due to Iran, we’ve missed how swiftly a new European debt crisis has been brewing. If it deepens, it won’t be a simple repeat of 2010-12, which nearly crushed banks and triggered defaults. Europe’s second largest economy in crisis, and dispute with Frankfurt, could trigger even more massive instabilities.

Populism is a massive threat to markets. Inflation, tax-hikes, petrol costs, poverty, political mismanagement and a host of other failings could further destabilise the West, while markets seem determined to stay euphoric whatever the evidence to the contrary.  

Global Stock markets seem to be living the dream, but under the surface there are serious concerns. In Yoorp the ECB makes its power play this week to confirm its place within the political trinity of States, EU and ECB by effectively handing itself control of the fiscal and industrial policy levers that could power up Europe. No one tell the Germans…

Markets look set to rally strongly into Q2, but are they over-exuberant? The rise in deaths and new strains in Brazil hints the Covid war isn’t won yet, there are rising political risks in Europe, and widening wealth inequality is apparent everywhere. Just how solid are our expectations of stability, renewed global travel and recovery if Covid is here for the long-term?

Interesting markets as tech wobbles on the perceived inflation threat while bond yields continue to edge upwards. In our regular virtual-office Monday huddle we debated whether the inflation threat is real, immediate or likely to be delayed