Investing.com - French government bonds rallied on Monday, leading the gap between French and German borrowing costs to narrow sharply as a wave of relief swept through markets after the first round results of the country’s presidential election race.
Centrist former economy minister Emmanuel Macron edged out Marine Le Pen, leader of the far-right National Front party, in the first round of voting on Sunday, delivering a result that most investors were hoping for.
Macron took 23.8% of Sunday’s first-round vote ahead of Le Pen on 21.7% according to final voting figures from France's Interior Ministry.
Polls have indicated that Macron will comfortably beat Le Pen in the runoff vote on May 7, easing fears over the risk of Frexit and the potential breakup of the euro zone.
France’s 10 year bond yield fell to 0.77% by 08.32 GMT, its lowest since January 17.
Yields rise when bond prices fall as investors demand a higher rate of return for holding the debt.
The yield on Germany's safe-haven 10 year Bund jumped to 0.35%.
That left the gap between the two, seen as a gauge of French election risks in recent months, at around 42 basis points, down from around 62 bps on Friday and the tightest since January.