Macron Taps Bayrou To Navigate France's Fractured Politics: ETFs To Watch

France’s Hôtel Matignon is set to have a new resident now that President Emmanuel Macron has tapped a centrist ally, François Bayrou, as the new prime minister.

What Happened: Macron’s announcement comes roughly one week after former PM Michel Barnier lost a no-confidence vote and resigned.

Bayrou, a 73-year-old political veteran and founder of the centrist Democratic Movement, has run for president three times.

He's also been the mayor of Pau, a southwestern town in France, since 2014.

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Why It Matters: Macron is attempting to navigate a deeply divided parliament.

Political tensions are high due to France's soaring deficit. The country faces $42 billion in spending cuts and $21 billion in tax hikes, deepening divisions within the fractured National Assembly.

Barnier warned that his far-right critics, namely Marine Le Pen's National Rally and the leftist New Popular Front, will cause millions of French citizens to face economic instability, including rising interest rates and tax hikes, per the Guardian.

Barnier only took office in September.

Macron is halfway through his second term as president. Bayrou would be the fourth prime minister this year, according to the BBC. Elisabeth Borne and Gabriel Attal preceded Barnier.

If Le Pen’s allies form a strong enough opposition, they could potentially complicate the passage of critical legislation.

On a national level, France’s snap election this past summer underscored how Le Pen’s party continues to show increased strength over Macron’s centrist party.

Examples of French or Euro-Centric ETFs:

• Invesco CurrencyShares Euro Trust FXE tracks the euro’s value against the U.S. dollar.
• ProShares UltraShort Euro EUO provides leveraged inverse exposure to the euro’s performance against the dollar.

Investors can also track the market’s response to political maneuvers via the iShares MSCI France ETF EWQ. It offers focused exposure to the French economy. The ETF’s top holdings include LVMH Moët Hennessy Louis Vuitton LVMHF, TotalEnergies TTE, and Schneider Electric SBGSY.

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Image: Hôtel de Matignon via Shutterstock