PREDICTION: MERKEL WINS

Takeaway: While we believe Merkel will remain Chancellor, it’s unclear who her coalition partners will be.

German Federal elections will be held this Sunday. The race has been a tight one; not only in the last few weeks, but also over the last few months. While we believe that Angela Merkel will remain the Chancellor, with an estimated 30% still undecided, it’s unclear who her coalition partners will be. 

 

PREDICTION: MERKEL WINS - merks

 

In polling week-over-week, Merkel’s CDU/CSU party has held 40% while her current coalition partners, The Free Democrats (FDP), slipped half a point to 5.5%.  The opposition, led by Peer Steinbrueck’s Social Democrats (SPD), gained 1% on the week to 27%, while its potential coalition partners the Greens lost -2% to 9% and the Left gained half a point to 8.5%.  Other Parties, which include the anti-Euro Alternative for Germany (AfD), gained 1 point to 10%.

 

The polls equate to a lead of 1% for Merkel’s party with its current FDP coalition partners over the opposition SPD in coalition with the Greens and the Left.  Note that despite slight shifts in the polls, Merkel’s 1% advantage this week is the same as she had a week ago.   (See charts below)

 

As it relates to Monday’s financial markets, we expect that any coalition government that is formed with Chancellor Merkel’s party will represent a smooth transition to the market. 

 

PREDICTION: MERKEL WINS - hed1

 

PREDICTION: MERKEL WINS - hed2