As of late, the European elections produce more volatility for mortgage-backed securities. A source of uncertainty regarding the outcome, mortgage-backed securities showed wild market fluctuation.
Investor Focus as European Elections Produce More Volatility
Currently, investors fully concentrate on the French election. In general, the European elections product more change in mortgage rates. However, France’s election takes place on April 23rd.
French Presidential Election Campaign Platforms
Lately, polls show a close race as the European elections produce more volatility. The election stands between Marine Le Pen and Emmanuel Macron. Marine Le Pen’s campaign centers on plans for France to leave the European Union (EU). Additionally, Marine Le Pen intends to stop using the euro as currency.
Meanwhile, Emmanuel Macron represents French centrism. As a centrist, Emmanuel Macron runs on a more traditional platform. While it is not clear what would happen in the event that France chooses to leave the European Union, this platform does create uncertainty as it pertains to mortgage-backed securities.
Effect on Mortgage-Backed Securities as European Elections Produce More Volatility
As a result, investors reacted by shifting their funds to safer assets. This reaction is very typical in times of great economic uncertainty. Safer assets favor a victory for Marine Le Pen. Moreover, safer assets reflect negatively for investors in the event that Emmanuel Macron wins the election.
Since mortgage-backed securities are viewed as relatively safer assets in the United States, the shift in sentiment greatly affected them. Concurrently, mortgage-backed securities face a plethora of volatility.
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