The Eurozone Is Different From The US And The UK: Market Anxiety Is Beginning To Cool.

Over the past year, the rise of populism has cast a shadow over Europe. From France and Italy to Holland, there is an endless stream of European threats.

However, this situation has changed rapidly, and now it is time to consider another scenario, and populist forces are fading away.

In Holland, the extreme right-wing Liberal Party led by Wilder predicted that in February 2016, it would have won 40 seats at the house of Commons, down to 30 a month ago, and the latest polls show that this seat is only 25.

This dynamic is related to the Dutch's behavior in the public opinion questionnaire.

In some countries, the intention of supporting the rightist parties is deliberately concealed, and the Dutch have exaggerated their protest intentions only to send out relevant signals.

When the real election comes, they tend to make rational choices instead of voting with emotion.

As we all know, even if Will Des wins the majority vote, he will not be able to take part in the ruling. Since the failure of cooperation in 2011, he has lost the trust of other political parties.

Bon, the leader of the French right wing party's "National Front", reached 30% while Trump won the US election. Now it has dropped to 26%, and Ma Hung Hong has risen to 24.5%.

According to the IFOP poll, Ma Hong Hong will beat Bon in the 60.5% round of 39.5% in the second round.

Bon may have done better than his father, Jean-Marie Le Pen, but this may not have a substantial impact on the French.

In Germany, the support rate of the anti emigration greens against the euro area dropped to 8%, while that of the September 2016 poll was 15%.

However, the CDU and the social democratic party support rate is above 30%, which means that, without accident, in the September 24th German election, the greens won the chance of winning the election very little.

The support rate of the five star Movement Party of the populist forces in Italy dropped to 27%. Its support rate in the middle of last year was more than 30%. Although it still won the top spot, this advantage will be narrowed over time.

According to foreign media, Italy's former prime minister, Lenzi, is expected to seek a parliamentary election in June 11th.

Of course, the predictions given by the polls may also be erroneous. The British referendum and the US general election have made more people worry about this risk.

But the market has ignored one problem: the European Union's polling record is better than that of the United Kingdom and the United States, and the referendum of the British referendum and the support of the US general election were also close.

But in the German, French and Holland elections, with the support of the 1/10 to 1/4 population, the far right forces will be constrained by the European multi party coalition mode.

The political power of the continent is more stable and inclusive than that of the United States and Britain.

Since the end of the Second World War, Europe has done a lot of political work in order to avoid the rise of extremist forces.

This is reflected in the presidential election in Austria.

In the second round of elections held in December last year, the former Green Party leader Alexander Vanderbelen defeated Hofer, an extreme right-wing liberal candidate who won 46.7% votes by 53.3%.

Worries caused by the French election cooled temporarily.

The market showed this signal, France and Germany bond spreads narrowed.

The 10 year bond spread between France and Germany narrowed to 64 basis points.

French bonds and Germany

The difference reached a four year high in February, which was used as an indicator of the stability of the eurozone.

In the first 2 months of this year, the average daily trading volume of French government bonds reached 16 billion euros, which has never happened since the debt crisis in the eurozone.

But in France, institutional investors believe that the market may exaggerate the chances of Bon's victory.

Eric Brard, head of global fixed income at Amundi, Europe's largest Asset Management Co, said that the current market volatility provided a buying opportunity for investors who thought Bon would be defeated.

The euro has rebounded briefly because of the easing of this concern, but now it is back to the downtrend. It fell to the 1.05 pass on Thursday (March 9th), as the focus shifted to the Fed's interest rate hike.

After the Hawks released by the US Federal Reserve vote Committee, and the US ADP increased by 298 thousand in February, the market expects the fed to raise interest rates in March, which is almost a certainty.

The ECB summary of the January monetary policy conference points out that despite the euro zone as a whole

Continuing to rise, but members of the monetary policy committee admit that gradual weakening of stimulus measures may jeopardize inflation, and stable stimulus measures are needed.

The main reason is that the euro area still has a lot of excess capacity to drag down inflation. Most of the output gap is expected to imply that the current output gap is still below the potential level of about 2%.

In the updated macroeconomic forecast, the ECB expects to increase the inflation growth rate in 2017 by at least 0.5%, from 1.3% to 1.8%, and maintain the expected growth rate of inflation in 2018 and 2019 unchanged at 1.5% and 1.7% respectively.

The bank said Europe's political risk will also keep the ECB cautious, and the euro will continue to fall next year.

Next Wednesday (March 15th), Holland will have election day as the first major political risk event in the euro area.

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