German elections: Four in a row, who helps Merkel run the show? - Rabobank

Angela Merkel is seeking her fourth term in the national elections and thanks to the strong performance of the German economy, she is full steam ahead, according to analysts at Rabobank.

Key Quotes

“The elections may therefore appear a non-event for financial markets, but Merkel still has to form a coalition government”

“Having been in power for almost twelve years as Germany’s Bundeskanzlerin, Angela Merkel is seeking her fourth term in the national elections on Sunday September 24. With three recent state election wins in a row for her Christian democratic party, she is full steam ahead to strengthen her appearance as a haven of stability in an unstable world. This is being welcomed by financial markets. With a contentious Brexit, an unpredictable President Trump, the two strongmen Erdogan and Putin, and two close defeats of populism in France and the Netherlands, market participants probably already have more than enough on their plate.”

“We regard a renewed Grand Coalition as the most likely, even though this goes against both parties’ preferences”

“We may then also see more progress on Eurozone integration”

“It would also be the most benign scenario for the Euro”

“The recent strength of the Euro is at least partially based on the optimism regarding a period of closer integration. If the German-Franco axis fails in this objective the next two or three years, the Euro will no doubt pay a heavy price. For now, however, there appears to be a window of relative calm in the Eurozone political landscape. If we couple this with the spate of good news on the economic front that is showing little sign of letting up, the outlook for the common currency looks rosy.”