POWER: FR-DE Jao 2025 Auction Spread Widens Significantly

The latest opinion polling from Ifop shows President Emmanuel Macron's approval rating hitting a six-year low, with just 25% of respondents saying the president is doing a good job. This is the lowest approval for Macron in any Ifop poll since December 2018, when the anti-gov't 'yellow vest' protests were sweeping across the country. 

• The low approval rating for Macron may not initially be seen as important, given he cannot run for office in 2027. However, given the dysfunction in a National Assembly divided three ways between the left, centre, and right, the unpopularity of the president is likely to impact on support for the centrist alliance of parties (Ensemble) supportive of his presidency. Another legislative election cannot take place before June 2025, but given the minority status of the Barnier gov't a confidence vote bringing down the gov't is a likely event next summer.
• A public increasingly disenchanted with the Macron presidency could turn on the centrist parties come any snap election, risking the 'Republican front' that denied the far-right Rassemblement National a majority in the July legislative election.
• The November Ifop poll also shows approval for PM Michel Barnier standing at 40% amid the prolonged efforts by his minority gov't to get a budget through parliament. Barnier's predecessor, Gabriel Attal, never fell below 41% approval in any Ifop poll during his short tenure at Matignon.  

Chart 1. Approval and Disapproval Ratings for President Emmanuel Macron, %

Source: Ifop

Mediums (4 auctions):

• 0.875% Jul-33 green gilt: Unanimous support amongst GEMMs for the one reopening penciled in by the DMO (as expected).
• 4.25% Jul-34 gilt: Very strong support amongst GEMMs for a final reopening. Given the syndication in February, this auction will almost certainly be at a January auction (15/29 January).
• New 10-year gilt: A reopeneing of the gilt likely launched via syndication in February was supported by both GEMMs and investors (we pencil this in for March, late in the quarter).
• 4.375% Jan-40 gilt: We had noted that we expected 1-2 auctions of this gilt despite no mention of it in the agenda. There was, however, support from both GEMMs and investors for one auction in the medium bucket. However note that there was support from most GEMMs (and a number of investors) to also reopen this gilt in the long bucket once in January.

Longs (5 auctions):

• 4.375% Jan-40 gilt: See above. One auction in the long bucket.
• 1.50% Jul-53 green gilt: One auction supported in  FQ4.
• 4.375% Jul-54 gilt: Two auctions supported by most GEMMs and investors.
• 4.00% Oct-63 gilt: Again there was no mention from the DMO of this gilt in the agenda, but GEMMs and investors both noted their preference for an auction of this gilt.

We update our expectations for the gilt auction schedule for FQ4 (Jan-Mar). The full calendar will be released on Friday at 7:30GMT.

Shorts (7 auctions):

• 4.375% Mar-28 gilt: Due to be launched tomorrow (with no reopenings in FQ3). We look noted that we looked for 2 (possibly 3) auctions in FQ4, both GEMMs and investors favoured "up to three" auctions in FQ4. We think three auctions now look most likely in the quarter.
• New 5-year gilt: DMO says a launch and at least 2 reopenings (in line with our expectations and strongly supported by both investors and GEMMs). We pencil in a January launch with a potential maturity date in January 2030 (no maturity given by DMO yet or noted in the consultation minutes). The FY29/30 sees a lower volume of gilts maturing than other upcoming fiscal years and this would also give a decent gap to the 4.00% Oct-31 gilt. The consultation minutes affirms our expectation that the 4.125% Jul-29 gilt is unlikely to be reopened in FQ4.
• 4.00% Oct-31 gilt: DMO to reopen at least once. We had pencilled in 2 auctions (in addition to the 4 December auction) but in light of the feedback at the DMO consultation meetings, we now only look for one auction in the quarter.