In yesterday's German federal election, the CDU/CSU alliance achieved a notable victory, securing 28.6% of the votes. Friedrich Merz is poised to become chancellor and is expected to form a coalition with the Social Democrats. This outcome is anticipated to reduce political deadlock and facilitate smoother policy-making. The markets have responded positively, with the euro rising and significant gains in stock indices, indicating investor optimism for a business-friendly government. However, concerns remain about increasing bond yields linked to potential increases in government spending.
Markets are already reacting to the CDU/CSU alliance's electoral victory. German and European stocks are looking at a solid boost.
If coalition talks are smooth and reforms start rolling, we could see even more strength in the euro.
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