So the French election occurred on Sunday and the effect on the financial markets of the world was nothing notable. For many traders and investors the election was a “nothing burger”. Many traders had expected the election to set off fireworks in many markets: equities, FX, interest rates. However, nothing of any importance happened. The U.S. dollar has firmed slightly over the last two days; the Euro FX has declined slightly over the same period. The only real market movement of note has been in the gold market. The value of gold has declined over eighty dollars since the middle of April.
Another oddity has been the movement in the VIX index. The VIX is used as an indication of traders’ opinion of volatility in financial markets. The VIX is now down to a level not seen since 1993. This low level in the VIX is astounding given the record high prices that the Western stock markets have achieved in recent months. Interest rates in western countries continue near record lows.
What the markets need to break out of the sanguine mood we now see is at this point a mystery.