Nomura's latest take: Europe is shifting hard right politically, and markets aren't freaking out about it.
The "seeds of political change" are sprouting across the continent — populist movements gaining ground, immigration backlash intensifying, and traditional center parties losing their grip. From France to Germany to Italy, the political landscape is fragmenting.
What's surprising? Equity markets and the euro are holding steady. No panic. No selloff. Just... acceptance.
This suggests either:
1) Markets believe these shifts won't disrupt the ECB, fiscal policy, or corporate earnings
2) Investors are numb to political chaos after Brexit, Trump, and years of European dysfunction
3) The right-wing populists are being viewed as "pro-business" or at least not anti-market
The real question: When does political instability actually matter for European assets? History says it takes a LOT — sovereign debt crises, currency breakup fears, or actual policy paralysis — before markets care.
For now, European equities and the $EUR are trading like politics is just noise. But if these "seeds" grow into full-blown coalition collapses or EU fragmentation threats, that complacency could flip fast.
Watch French OATs, German election polls, and whether the ECB stays dovish regardless of who's in power.
The "seeds of political change" are sprouting across the continent — populist movements gaining ground, immigration backlash intensifying, and traditional center parties losing their grip. From France to Germany to Italy, the political landscape is fragmenting.
What's surprising? Equity markets and the euro are holding steady. No panic. No selloff. Just... acceptance.
This suggests either:
1) Markets believe these shifts won't disrupt the ECB, fiscal policy, or corporate earnings
2) Investors are numb to political chaos after Brexit, Trump, and years of European dysfunction
3) The right-wing populists are being viewed as "pro-business" or at least not anti-market
The real question: When does political instability actually matter for European assets? History says it takes a LOT — sovereign debt crises, currency breakup fears, or actual policy paralysis — before markets care.
For now, European equities and the $EUR are trading like politics is just noise. But if these "seeds" grow into full-blown coalition collapses or EU fragmentation threats, that complacency could flip fast.
Watch French OATs, German election polls, and whether the ECB stays dovish regardless of who's in power.