The Paris Bourse is set to open on a positive note on Friday morning, after suffering a brutal correction this week against a backdrop of political uncertainty and questions over interest rates.

At around 8.15 a.m., the 'future' contract on the CAC 40 index - June delivery - was up 19.5 points at 7,725 points, suggesting a modest recovery from the heavy losses of recent sessions.

Hit hard by the results of the European elections and the announcement of the dissolution of the French National Assembly, the Paris market is currently headed for a 3.6% decline for the week as a whole.

After successively breaching the 8,000, 7,900 and 7,800 point thresholds over the past few days, its gains since the start of the year are now down to around 2%.

The markets fear that the uncertainty surrounding the outcome of the forthcoming parliamentary elections, with the RN possibly coming to power, will lead investors to steer clear of French equities.

Already weakened by S&P's downgrade of France's credit rating, the French 10-year government bond yield has risen by more than ten basis points since Sunday, to 3.16%.

Over the past week, the spread with Germany has widened to almost 70 basis points, illustrating investors' mistrust.

We expect the electoral campaign to cause some jitters on the stock markets, but we don't expect anything too serious or lasting," moderates Christopher Dembik, Investment Strategy Consultant at Pictet AM.

The lesson of recent years is that we must never exaggerate the influence of politics on the medium-term performance of developed-country financial markets (e.g. Brexit, Trump, etc.)", adds the analyst.

Recent history has taught us that volatility on European bond markets is often ephemeral", adds Guillaume Truttman, manager at Eiffel Investment Group.

The professional can't help but draw a parallel with the debt crisis that shook the eurozone in 2011-2013.

What may appear to be a gamble on the part of Emmanuel Macron is now fuelling a political uncertainty that has, in the past, left bad memories for European investors when the risk of eurozone fragmentation was acute", he recalls.

Added to this are fears about the trajectory of the Fed's monetary policy, which could result in fewer rate cuts than hoped for in the months ahead.

Against this backdrop, the Dow Jones posted a weekly decline of around 0.9%, while the Nasdaq gained over 3% to set new all-time highs.

The week's only cause for satisfaction was the latest statistics, which showed that inflation was under better control in the US, reinforcing the scenario of a "soft landing" for the US economy this summer.

Import price figures and the Michigan consumer confidence index, due out this afternoon, will tell us whether this favorable scenario holds up.

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