FT : Segantii bet against Canada Goose after call with Morgan Stanley

Segantii bet against Canada Goose after call with Morgan Stanley
US prosecutor examined the conversation during its investigation of the Wall St bank

Hedge fund Segantii Capital Management bet against Canada Goose after speaking to a Morgan Stanley banker whose desk knew of an impending share sale that threatened to hit the clothing brand’s stock price.

US prosecutors examined the 2018 conversation between Segantii portfolio manager Robert Gagliardi and a Morgan Stanley banker as part of a probe that led to the Wall Street bank paying a $249mn penalty earlier this year.

Details of the conversation were published by the Department of Justice alongside a non-prosecution agreement with the Wall Street bank, but Gagliardi and Segantii were not named.

Three people with knowledge of the matter said that Gagliardi, a block trading specialist nicknamed “Gags” who worked for Segantii as a portfolio manager in London, was the hedge fund investor on the call.

The DoJ’s statement said a hedge fund investor called a Morgan Stanley banker and asked whether there was anything he “should be focusing on for, uh, tonight, tomorrow”. The banker replied: “How is your store of cold weather jackets?” and “chuckled”.

The banker’s desk had been sent confidential details of a planned block sale of shares in New York and Toronto-listed Canada Goose, an upmarket parka brand, the DoJ document said.

After they discussed the potential block trade, which can depress a company’s share price, the hedge fund investor ended the call by saying, “I’ll go to work on it. Thanks, man”.

The DoJ statement said he shorted the stock and later covered his position using some of the shares that were up for sale as part of the block. The hedge fund investor made about $760,000 in profits, according to the document. The block trade was executed by a different financial institution than Morgan Stanley, it said.

Segantii and Gagliardi were not accused of any wrongdoing and the prosecutors did not allege that they knew the banker had confidential information.

In block trading, a corner of the market in which banks offload large chunks of stocks through private deals, bankers and counterparties such as hedge funds have regular conversations about potential deals.

Gagliardi “categorically refutes any suggestion that he acted improperly”, his lawyer Seth Redniss said. “He has never been accused of wrongdoing, or faced any regulatory restrictions globally.”

Segantii, the DoJ and Morgan Stanley all declined to comment.

The connection between Morgan Stanley and Segantii highlights how the hedge fund became a dominant force in block trading and built relationships with one of Wall Street’s biggest banks.

The DoJ had identified the portfolio manager in the Canada Goose trade as having “worked at a Hong Kong-based hedge fund in London” in 2018 and later, by August 2021, working at “a Nevada-based hedge fund”. 

After leaving Segantii, Gagliardi joined the Nevada-based hedge fund Evolution Capital Management, which employed him from April 2021 until March 2022, according to New York court filings.

Those filings are part of a civil court case between Evolution and Gagliardi that began after he left the firm and centres on Gagliardi’s entitlement to bonus payments.

In the documents, Evolution alleged that Gagliardi lied to his employer about losing his phone when it “had been confiscated by the US Marshals in connection with a federal criminal investigation” into block trading.

Gagliardi said in court filings that Evolution had made “serious allegations . . . to the effect that I engaged in misconduct” and added: “I make clear that they are false”. He accepted that the US Marshals Service, an agency of the DoJ, had seized his phone.

Segantii was one of Asia’s largest hedge funds, with $4.8bn under management as of March, according to its website.

But the firm is shutting down after Hong Kong regulators announced in an unrelated matter a criminal insider dealing case against the company, its founder Simon Sadler and former Segantii trader Daniel La Rocca in May. Segantii has said it plans to defend itself “vigorously”.

The Hong Kong case relates to a 2017 trade in shares of the retailer Esprit. Sadler, who owns Blackpool Football Club, and La Rocca appeared in a Hong Kong magistrates’ court for a brief procedural hearing on Wednesday. They did not comment when approached by the Financial Times in court and their lawyers did not respond to a request for comment.

FT : OpenAI expands lobbying team in battle to influence regulation

OpenAI expands lobbying team in battle to influence regulation
ChatGPT maker beefs up global affairs unit as politicians push for new laws that could constrain powerful AI models

OpenAI has rapidly built up an international team of lobbyists over the past year, as the ChatGPT maker joins rivals such as Google and Meta in seeking to influence new regulations while politicians increase their scrutiny over artificial intelligence.

The San Francisco-based start-up told the Financial Times it has expanded the number of staff on its global affairs team from three at the start of 2023 to 35. The company aims to build that up to 50 by the end of 2024.

The push comes as governments explore and debate legislation around AI safety that could constrain the start-up’s growth and the development of its cutting-edge models, which underpin products such as ChatGPT.

“We are not approaching this from a perspective of we just need to get in there and quash regulations . . . because we don’t have a goal of maximising profit; we have a goal of making sure that AGI benefits all of humanity,” said Anna Makanju, OpenAI’s vice-president of government affairs, referring to artificial general intelligence, or the point that machines have equivalent cognitive abilities to humans.

While forming a small part of OpenAI’s 1,200 employees, the global affairs department is the company’s most international unit, strategically positioned in locations where AI legislation is advanced. This includes stationing staff in Belgium, the UK, Ireland, France, Singapore, India, Brazil and the US.

However, OpenAI remains behind its Big Tech rivals in this outreach. According to public filings in the US, Meta spent a record $7.6mn engaging with the US government in the first quarter of this year, while Google spent $3.1mn and OpenAI $340,000. Regarding AI-specific advocacy, Meta has named 15 lobbyists, Google has five while OpenAI has only two.

“Walking in the door, [ChatGPT had] 100mn users [but the company had] three people to do public policy,” said David Robinson, head of policy planning at OpenAI, who joined the company in May last year after a career in academia and consulting for the White House on its AI policy.

“It was literally to the point where there would be somebody high level who would want a conversation, and there was nobody who could pick up the phone,” he added.

OpenAI’s global affairs unit does not deal with some of the most fraught regulatory cases, however. That task goes to its legal team, which handles issues related to UK and US regulators’ review of its $18bn alliance with Microsoft; the US Securities and Exchange Commission investigation into whether chief executive Sam Altman misled investors during his brief ousting by the board in November; and the US Federal Trade Commission’s consumer protection probe into the company.

Instead, OpenAI’s lobbyists focus on the spread of AI legislation. The UK, the US and Singapore are among many countries dealing with how to govern AI and consulting closely with OpenAI and other tech companies on proposed regulations.

The company was involved in the discussions around the EU’s AI Act, approved this year, one of the most advanced pieces of legislation in seeking to regulate powerful AI models.

OpenAI was among AI companies that argued some of its models should not be considered among those that provide a “high risk” in early drafts of the act and would therefore be subject to tougher rules, according to three people involved in the negotiations. Despite this push, the company’s most capable models will fall under the remit of the act.

OpenAI also argued against the EU’s push to examine all data given to its foundation models, according to people familiar with the negotiations.

The company told the FT that pre-training data — the data sets used to give large language models a broad understanding of language or patterns — should be outside the scope of regulation as it was a poor way of understanding an AI system’s outputs. Instead, it proposed the focus should be on post-training data used to fine-tune models for a particular task.

The EU decided that, for high-risk AI systems, regulators can still request access to the training data to ensure it is free of errors and bias.

Since the EU’s law was approved, OpenAI hired Chris Lehane, who worked for President Bill Clinton, Al Gore’s presidential campaign and was Airbnb’s policy chief as vice-president of public works. Lehane will work closely with Makanju and her team.

OpenAI also recently poached Jakob Kucharczyk, a former competition lead at Meta. Sandro Gianella, head of European policy and partnerships, joined in June last year after working at Google and Stripe, while James Hairston, head of international policy and partnerships, joined from Meta in May last year.

The company was recently involved in a series of discussions with policymakers in the US and other markets around OpenAI’s Voice Engine model, which can clone and create custom voices, leading to the company narrowing its release plans after concerns over risks of how it might be used in the context of global elections this year.

The team has been running workshops in countries facing elections this year, such as Mexico and India, and publishing guidance on misinformation. In autocratic countries, OpenAI grants one-to-one access to its models to “trusted individuals” in areas where it deems it is not safe to release the products.

One government official who worked closely with OpenAI said a different concern for the company was ensuring that any rules would be flexible in future and become outdated with new scientific or technological advancements.

OpenAI hopes to address some hangovers from the social media age, which Makanju said has led to a “general distrust of Silicon Valley companies”.

“Unfortunately, people are often seeing AI with the same lens,” she added. “We spend a lot of time making sure people understand that this technology is quite different, and the regulatory interventions that make sense for it will be very different.”

However, some industry figures are critical of OpenAI’s lobbying expansion.

“Initially, OpenAI recruited people deeply involved in AI policy and specialists, whereas now they are just hiring run-of-the-mill tech lobbyists, which is a very different strategy,” said one person who has directly engaged with OpenAI on creating legislation.

“They’re just wanting to influence legislators in ways that Big Tech has done for over a decade.”

Robinson, OpenAI’s head of planning, said the global affairs team has more ambitious goals. “The mission is safe and broadly beneficial, and so what does that mean? It means creating laws that not only let us innovate and bring beneficial technology to people but also end up in a world where the technology is safe.”

FT : Reformist candidate Masoud Pezeshkian shakes up Iran presidential election

Reformist candidate Masoud Pezeshkian shakes up Iran presidential election
Former health minister looks to upset odds after being chosen as one of six candidates for this month’s vote

A wave of optimism has swept over Iran’s political reformists after a representative from the camp was cleared to run against several hardline candidates in this month’s presidential election.

Masoud Pezeshkian, a 69-year-old surgeon and member of parliament, was the surprise choice on the list of eligible candidates released over the weekend by the Guardian Council, the hardline-dominated body that has to approve all nominations for the presidency.

Pezeshkian, a former health minister, was not originally viewed as a leading reformist candidate, but he had gained admirers for his openness, willingness to criticise the Islamic republic’s hardline policies, and commitment to justice and equality.

His “for Iran” campaign has called for a new era of relations between the regime and the population, and for the widespread “mistrust” of politicians to be addressed via a process of national “reconciliation”. 

“Pezeshkian will be the phenomenon in this presidential election,” said Mohammad-Sadegh Javadi-Hesar, a reformist politician. “Iranian society is incredibly disillusioned and has been waiting for a major development. I’m very optimistic that people will see Pezeshkian as the one.”

The Guardian Council blocked senior reformists from running in the 2021 vote that was won by Ebrahim Raisi, whose death in a helicopter crash last month forced the snap election on June 28.

Few observers had expected the regime led by supreme leader Ayatollah Ali Khamenei to change strategy and allow reformers on to the ballot paper this time, but the addition of Pezeshkian has shaken up the contest.

Whether this was a conscious decision to add variety to the race and encourage turnout, or a calculation that a mid-ranking reformist would not be able to garner sufficient support to win, is a matter of debate.

However, Pezeshkian has already been endorsed by Es’haq Jahangiri, a reformist former first vice-president who was disqualified from the vote by the Guardian Council, and Javad Zarif, a former foreign minister who negotiated the 2015 nuclear deal with world powers. Mohammad Khatami, the reformist former president, is expected to do the same.

Supporters of Ali Larijani, a senior conservative also barred from running in the election who had moved closer to moderate forces, have joined up with the Pezeshkian campaign in some cities, analysts say.

Other candidates in the six-man race include Mohammad Bagher Ghalibaf, speaker of parliament and a former Revolutionary Guard commander who is seen by many as the frontrunner; Alireza Zakani, the mayor of Tehran; and Saeed Jalili, a former nuclear negotiator who represents the most hardline wing of the regime.

Analysts also say Pezeshkian’s background as a Koran teacher and reciter of the Nahj-ul-Balaghah, a key text for Shia Muslims, could make him an acceptable candidate for other segments of society, including traditional conservatives.

Mohammad-Ali Abtahi, a former reformist vice-president, suggested that this month’s poll could resemble the 1997 vote when Khatami was the surprise winner, or the 2013 election won by the centrist Hassan Rouhani on a promise to sign the nuclear deal. That accord failed when then-President Donald Trump pulled the US out and imposed tough sanctions, striking a massive blow to Iran’s moderate and reformist politicians.

One regime insider said Iran’s leadership was conscious of the need for a high participation rate to show that the Islamic republic had public legitimacy. Raisi’s 2021 victory was tarnished by the lowest turnout in any Iranian presidential poll, at just 48 per cent. Experts said Pezeshkian needed at least a 60 per cent turnout to have a chance.

“Pezeshkian’s supporters are expected to be from the intellectual and business communities, as well as breadwinners in families who feel crushed under economic pressure,” Abtahi said. “The youth, however, still remain distant from the polling stations. But things can change up to the very last minute on polling day.”

The regime insider also insisted that Khamenei and the Guards could work with Pezeshkian if he upset the odds and won.

“The country needs a president who can engage with the world and, if necessary, enter into serious talks with the US,” the insider said. “Pezeshkian is a moderate character and a good compromise candidate for the Islamic republic.”

>>> US After Hours Summary: AVGO jumps +12.1% on earnings and 10-for-1 stock spl

After Hours Summary: AVGO jumps +12.1% on earnings and 10-for-1 stock split; PLAY -8.7%, OXM -2.7% lower on earnings; JILL -16% falls on stock offering

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: AVGO +12.1% (also announces 10-for-1 stock split), CURV +5.5% (also announces new COO), PLCE +2.7%

Companies trading higher in after hours in reaction to news: WRB +2% (declares $0.50/sh special dividend, increases regular dividend, approves a 3-for-2 stock split), MRVL +1.2% (in sympathy with strong AVGO earnings), NVDA +0.7% (in sympathy with strong AVGO earnings), CPA +0.7% (reports May traffic), RTX +0.6% (awarded $293 mln US Special Ops Command contract), JPM +0.4% (analyst conference presentation), CLLS +0.4% (unveils a gene therapy approach for Sickle Cell Disease in Nature Comms), SNPS +0.1% (in sympathy with strong AVGO earnings), WFG +0.1% (increases dividend), MSFT +0.1% (OpenAI's annualized revs double since late 2023, according to The Information), GE +0.1% (awarded $1.13 bln U.S. Army contract), ETRN +0.1% (Mountain Valley Pipeline preparing $7.85 bln pipe from WV to VA to operate following US regulatory approval, according to Reuters)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PLAY -8.7% (also executes sale leaseback agreement of two properties for $45 mln), OXM -2.7%

Companies trading lower in after hours in reaction to news: JILL -16% (2 mln share offering), PLNT -4.8% (completes previously announced refinancing transaction), PLAB -4.4% (CAO placed on administrative leave during ongoing internal review), RARE -1.9% (to file for accelerated approval of UX111 for MPS IIIA), VERI -1.9% (files $300 mln mixed shelf securities offering), ARES -1.1% (launches 2.65 mln share offering), COHR -0.6% (ships its 300-millionth optical transceiver from Malaysia facility), AZN -0.6% (FDA approves FARXIGA for pediatric type-2 diabetes), RNA -0.4% ($300 mln stock offering), DOMO -0.4% (enlisted by Fluxx to streamline intelligence), SWKS -0.1% (in sympathy with strong AVGO earnings), PFE -0.1% (Phase 3 Study of gene therapy for DMD did not meet its primary endpoint )

>>> US After Hours Summary: AVGO jumps +12.1% on earnings and 10-for-1 stock spl

After Hours Summary: AVGO jumps +12.1% on earnings and 10-for-1 stock split; PLAY -8.7%, OXM -2.7% lower on earnings; JILL -16% falls on stock offering

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: AVGO +12.1% (also announces 10-for-1 stock split), CURV +5.5% (also announces new COO), PLCE +2.7%

Companies trading higher in after hours in reaction to news: WRB +2% (declares $0.50/sh special dividend, increases regular dividend, approves a 3-for-2 stock split), MRVL +1.2% (in sympathy with strong AVGO earnings), NVDA +0.7% (in sympathy with strong AVGO earnings), CPA +0.7% (reports May traffic), RTX +0.6% (awarded $293 mln US Special Ops Command contract), JPM +0.4% (analyst conference presentation), CLLS +0.4% (unveils a gene therapy approach for Sickle Cell Disease in Nature Comms), SNPS +0.1% (in sympathy with strong AVGO earnings), WFG +0.1% (increases dividend), MSFT +0.1% (OpenAI's annualized revs double since late 2023, according to The Information), GE +0.1% (awarded $1.13 bln U.S. Army contract), ETRN +0.1% (Mountain Valley Pipeline preparing $7.85 bln pipe from WV to VA to operate following US regulatory approval, according to Reuters)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PLAY -8.7% (also executes sale leaseback agreement of two properties for $45 mln), OXM -2.7%

Companies trading lower in after hours in reaction to news: JILL -16% (2 mln share offering), PLNT -4.8% (completes previously announced refinancing transaction), PLAB -4.4% (CAO placed on administrative leave during ongoing internal review), RARE -1.9% (to file for accelerated approval of UX111 for MPS IIIA), VERI -1.9% (files $300 mln mixed shelf securities offering), ARES -1.1% (launches 2.65 mln share offering), COHR -0.6% (ships its 300-millionth optical transceiver from Malaysia facility), AZN -0.6% (FDA approves FARXIGA for pediatric type-2 diabetes), RNA -0.4% ($300 mln stock offering), DOMO -0.4% (enlisted by Fluxx to streamline intelligence), SWKS -0.1% (in sympathy with strong AVGO earnings), PFE -0.1% (Phase 3 Study of gene therapy for DMD did not meet its primary endpoint )

>>> JPMorgan Chase during conference: Investment banking fees looking closer to

JPMorgan Chase during conference: Investment banking fees looking closer to +25-30% growth yr/yr for the year; trading revenue trending slightly better than mid-single digits yr/yr (191.53 -2.81)
  • Co remarked that markets are trending slighter better than it anticipated but still in single digits yr/yr. Trading guidance was mid-single digits yr/yr and is trending slighter better than that.
  • Investment banking projected to grow in mid-teens yr/yr, and is looking closer to up 25% to 30%.

>>> US Close Dow -0.09% S&P +0.85% Nasdaq +1.53% Russell +1.62%

Closing Stock Market Summary
The stock market started the session in rally-mode following some pleasing inflation data. The May Consumer Price Index reflected some welcome disinflation on a year-over-year basis in total CPI (actual +3.3%; prior +3.4%) and core CPI (actual +3.4%; prior +3.6%).

Stocks hit some turbulence, though, in response to the latest move by the Fed.
The FOMC left the target range for the fed funds rate unchanged at 5.25-5.50%, as expected. The vote was unanimous, as expected. The directive reiterated that, "The Committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation is moving sustainably toward 2 percent," as expected.

If there was a surprise, it would be the Summary of Economic Projections (SEP), which showed a median estimate of only one rate cut this year versus three at the time of the March projections.

The market vacillated in the wake of the policy directive and SEP, and Fed Chair Powell's press conference, which featured a Fed Chair who was non-committal about the policy path. Ultimately, the S&P 500 (+0.9%) and Nasdaq Composite (+1.5%) settled further into record territory. The Dow Jones Industrial Average (-0.1%) settled slightly lower after the late-session choppiness.

The Treasury market also exhibited volatile action in response to the afternoon developments, ultimately settling with solid gains. The 10-yr note yield fell 11 basis points to 4.30% and the 2-yr note yield, which is most sensitive to changes in the fed funds rate, fell eight basis points to 4.75%.

The fed funds futures market is now pricing in a 63.3% probability of a 25 basis points rate cut at the September FOMC meeting versus a 52.8% probability yesterday.

Many stocks participated in today's gains, leading the equal-weighted S&P 500 to close 0.5% higher and seven of the 11 S&P 500 sectors to close with gains. The weightiest sector in the index -- information technology -- logged the biggest gain as some influential components reached fresh highs.

Apple (AAPL 213.07, +5.92, +2.9%), NVIDIA (NVDA 125.20, +4.29, +3.6%), and Microsoft (MSFT 441.06, +8.38, +1.9%) were standouts in that respect, but the top performing sector component was Oracle (ORCL 140.38, +16.50, +13.3%), which jumped 13% on quarterly results and guidance.

  • Nasdaq Composite: +17.3% YTD
  • S&P 500:+13.7% YTD
  • S&P Midcap 400: +6.1% YTD
  • Dow Jones Industrial Average: +2.7% YTD
  • Russell 2000: +1.5% YTD

Reviewing today's economic data:
  • Weekly MBA Mortgage Applications Index 15.6%; Prior -5.2%
  • May CPI 0.0% (consensus 0.1%); Prior 0.3%; May Core CPI 0.2% (consensus 0.3%); Prior 0.3%
    • The key takeaway from the report is the recognition that there was year-over-year disinflation, meaning prices moved in the Fed's desired direction. Accordingly, the market will conclude that there won't be another rate hike and will remain hopeful that a rate cut could come as early as September.

Thursday's economic calendar features:
  • 8:30 ET: May PPI (consensus 0.1%; prior 0.5%), Core PPI (consensus 0.3%; prior 0.5%), Weekly Initial Claims (consensus 224,000; prior 229,000), and Continuing Claims (prior 1.792 mln)
  • 10:30 ET: Weekly natural gas inventories (prior 98 bcf)

FT : Victory for French far right could trigger Liz Truss-style debt crisis, war

Victory for French far right could trigger Liz Truss-style debt crisis, warns finance minister
Sell-off in French government debt has pushed borrowing costs for some maturities above those of Portugal

France’s finance minister has warned that the country could face a debt crisis akin to the UK’s gilt market turmoil under former prime minister Liz Truss if the far-right Rassemblement National wins snap elections this month and next.

In a sign of market nerves, French government bonds have sold off sharply since President Emmanuel Macron’s shock announcement on Sunday that he would dissolve parliament and call fresh elections after his party was routed by the far right in European elections.

The sell-off has pushed the gap between French and German borrowing costs to its highest level since October. The cost of some maturities of French debt has also risen above those of Portugal, which was bailed out during the Eurozone crisis and had a junk credit rating for much of the past decade.

“If the RN implements its programme, a debt crisis is possible. A Liz Truss-style scenario is possible,” finance minister Bruno Le Maire told local party officials on Tuesday night.

A crisis erupted in the UK bond market in 2022 when Truss put forward a Budget that would have implemented tens of billions of pounds worth of unfunded tax cuts. Truss was forced to resign after only 44 days in office, but not before the crisis had knocked hundreds of billions of pounds off the value of UK pension schemes.


Le Maire warned that France “simply [does] not have the means to finance [RN leader] Marine Le Pen’s additional tens of billions of euros” in costs associated with the party’s agenda to cut sales taxes and reduce the retirement age.

“A Liz Truss scenario is impossible because the pensions of the French are not capitalised, and we do not intend to affect the savings of the French,” said the RN.

“These accusations betray a great economic ignorance and demonstrate the irresponsibility of the power in place.”

The yield on benchmark 10-year French bonds rose as much as 0.22 percentage points on Monday and Tuesday to more than 3.33 per cent at one stage, pushing the premium on France’s borrowing costs over Germany’s to 0.62 percentage points. 

French bonds later partially reversed losses to trade at a yield of 3.15 per cent on Wednesday, although they lagged behind a global rally. Investors remain concerned that, should the RN take or share power, its plans for tens of billions of euros of extra public spending could prevent any improvements in the country’s yawning budget deficit.

François Villeroy de Galhau, governor of the Bank of France, on Wednesday warned that the country needed to clarify its spending trajectory as soon as possible.

“It will be important that, whatever the outcome of the vote, France can quickly clarify its economic strategy and in particular its budgetary strategy,” he told Radio Classique on Wednesday morning. “Electoral periods are always accompanied by uncertainty . . . but investors do not like uncertainty.”

The heavy selling of French bonds this week follows rating agency S&P’s decision to lower its rating on French debt at the end of May to double A minus, pouring cold water on the French government’s efforts to improve its public finances. 

“When you look at French debt metrics the deficit is an issue and I think that, combined with political uncertainty, makes it no surprise that spreads have widened,” said Andrew Balls, chief investment officer for global fixed income at bond giant Pimco. Markets were “pricing the risk appropriately”.


France’s budget deficit was far above target at 5.5 per cent last year, which puts France on the EU’s excessive deficit procedure list. According to new EU rules that kick in next year, France will need to reduce its structural deficit by 0.5 per cent per year until the overall deficit comes below 3 per cent. 

The government has also pledged to bring the deficit below 3 per cent by 2027. Cedric Gemehl, analyst at Gavekal Research, said those plans “did not look credible to begin with” and “even less so now”, adding that “further downgrades look probable”. 

Jason Davis, global rates portfolio manager at JPMorgan Asset Management, said he has held a lower-than-benchmark weighting in French government bonds for some time. “The snap election increases uncertainty over the trajectory of France’s fiscal sustainability and subsequent credit ratings,” he said.

Still, France’s bond sell-off remains more muted than in 2017 when Le Pen finished second in the first round of voting for the French presidency, pushing the spread in borrowing costs between the Eurozone’s second-largest economy and Germany to 0.8 percentage points.

Since 2017, Le Pen has rowed back on her plans to pull France out of the EU. Analysts say that the widening of the spread this time should be less intense in the coming months, but warned that France’s presidential elections in 2027 could pose a bigger risk to markets should Le Pen remain far ahead in the polls.

“In a nutshell, the key issue for markets is the possible fiscal implications from a Le Pen majority rather than an existential one such as potential Frexit,” said Meera Chandan, global FX strategist at JPMorgan Chase.